|
T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
DEPARTMENT OF VETERANS' AFFAIRS
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES
DEPARTMENT OF REVENUE
STATE BOARD OF EDUCATION
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
VOLUME I
The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush
presiding, in City Hall, City Commission Chambers,
9 Harrison Avenue, Panama City, Florida, on Tuesday,
September 26, 2000, commencing at approximately
9:03 a.m. Central Daylight Savings Time.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
2
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
BOB CRAWFORD
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
BILL NELSON
Treasurer
TOM GALLAGHER
Commissioner of Education
* * *
ACCURATE STENOTYPE REPORTERS, INC.
STATE BOARD OF ADMINISTRATION 3
September 26, 2000
I N D E X
ITEM ACTION PAGE
STATE BOARD OF ADMINISTRATION:
(Presented by Tom Herndon,
Executive Director)
1 Approved 7
2 Approved 7
3 Approved 8
4 Approved 88
5 For Information Only 89
6 Deferred 90
DIVISION OF BOND FINANCE:
(Presented by J. Ben Watkins, III,
Director)
1 Approved 92
2 Approved 92
3 Approved 93
4 Approved 93
5 Approved 94
CERTIFICATE OF REPORTER 95
* * *
ACCURATE STENOTYPE REPORTERS, INC.
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September 26, 2000
1 P R O C E E D I N G S
2 (The agenda items commenced at 9:17 a.m.
3 Central Daylight Savings Time.)
4 GOVERNOR BUSH: Now we begin the regular
5 part of our business.
6 And what I'd like to do, as the people come
7 up to give their reports -- we have departments
8 that report directly to the Cabinet.
9 And if you could, Tom Herndon, from the
10 State Board of Administration will start off.
11 And first I want to -- want to commend Tom
12 for enhancing the economic development of the
13 tourism industry of Panama City, since one of
14 the items on the agenda is attracting a lot of
15 the people in the crowd, and I'm sure they took
16 part in -- stayed in the nice hotels here, and
17 had a nice dinner last night.
18 And -- good work. I'm sure that the
19 tourism folks of Bay County are happy that we
20 arranged it this way.
21 But if you could describe a little bit
22 about what you do before we start with the
23 specific agenda, so that the folks watching
24 television, and anybody that's interested in
25 knowing what goes on in State government, maybe
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September 26, 2000
1 get a better sense of what the State Board of
2 Administration is.
3 MR. HERNDON: Yes, sir.
4 Thank you, governor. We'd be happy to.
5 Briefly, the State Board of Administration
6 is the agency of government that invests money
7 on behalf of the various agencies of Florida,
8 state and local government.
9 Our largest client is the Florida
10 Retirement System. But in total, we invest
11 money for approximately 25 State and local
12 government entities. And in total, they have
13 invested with the State Board about 130 billion
14 dollars.
15 We just learned the other day that the
16 Florida Retirement System, which as I
17 indicated, is our largest client, is now ranked
18 the sixth largest retirement system in the
19 world, with 107 billion dollars in assets.
20 Since the Florida Retirement System is the
21 consolidated retirement system, all school
22 personnel, all county employees, all State
23 employees, and most special districts, and some
24 cities are members.
25 And so, in total, there's approximately
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September 26, 2000
1 650,000 active members of the retirement
2 system, and another 150,000 who are
3 beneficiaries. In other words, they're
4 receiving retirement checks.
5 The Governor and the Treasurer and the
6 Comptroller, acting as our Board of Trustees,
7 is charged with administering the overall
8 retirement system and the investment program of
9 the State Board.
10 And we're going to spend a little bit of
11 time this morning hearing from some of those
12 folks that were kind enough to come over from
13 Panama City last night -- or from Tallahassee
14 last night, and enhance Panama City's economy a
15 little bit, as we talk about one of the key
16 issues in front of the -- the Trustees today,
17 and that is the consideration of the defined
18 contribution plan and the new alternative
19 retirement program for members of the Florida
20 Retirement System.
21 So, Governor, that's a little bit of --
22 GOVERNOR BUSH: Thank you, Tom.
23 MR. HERNDON: -- background.
24 Move into the agenda itself.
25 And Item Number 1 is approval of the
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September 26, 2000
1 minutes of the meeting held September 12th,
2 2000.
3 COMPTROLLER MILLIGAN: I'll move it.
4 TREASURER NELSON: And I'll second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. HERNDON: Item Number 2 is approval of
8 a fiscal sufficiency of an issue not exceeding
9 100 million dollars, State of Florida, full
10 faith and credit, Department of Transportation
11 right-of-way acquisition and bridge
12 construction bonds, Series 2000.
13 TREASURER NELSON: And I'll move it.
14 COMPTROLLER MILLIGAN: Second.
15 GOVERNOR BUSH: Moved and seconded.
16 Without objection, it's approved.
17 MR. HERNDON: Item Number 3 begins
18 consideration of two items that relate directly
19 to the implementation of this new defined
20 contribution program.
21 Item Number 1 -- the first item up as Item
22 Number 3 is the discussion and possible
23 adoption of some performance criteria that we
24 are proposing to be used during the
25 implementation phase of the defined
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September 26, 2000
1 contribution program.
2 And those are attached as attachment
3 number 3. And there are about a dozen or 15 in
4 total that go to general success measures;
5 success measures for the third party
6 administrator; some investment success
7 measures; and, finally, education and asset
8 transition.
9 And here again, let me just underscore, it
10 is not our intention that these serve as the
11 performance measures when the program is
12 actually up and running, because then we'll
13 have much more tangible kinds of -- of success
14 measures, but rather over the course of the
15 next two years as we implement this program, to
16 be looking at these as measures of -- of our
17 overall performance.
18 COMPTROLLER MILLIGAN: I'll move it, Tom.
19 TREASURER NELSON: And I'll second.
20 GOVERNOR BUSH: Moved and seconded.
21 Any discussion?
22 Without objection, it's approved.
23 MR. HERNDON: All right. Item Number 4, as
24 amended, and as it was deferred from a prior
25 meeting, is the Investment Policy Statement.
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September 26, 2000
1 It is the principal source of discussion this
2 morning.
3 And by way of brief background, I would
4 just highlight that this particular document
5 has now been out for public review for slightly
6 over two months. It has had two full reviews
7 by our Advisory Council, our seven-member
8 Advisory Council.
9 It has also received one full day's review
10 by our new appointed Advisory Council, many
11 hours of public testimony, and has been
12 reviewed, and extensively commented on by the
13 members of the public, by three different
14 international consulting firms that we
15 currently retain. And all of that
16 information's been provided to you in the
17 record.
18 I'm not going to repeat all of that. We
19 do have a presentation that we can put up if
20 you would like. But in the interest of time, I
21 thought we would skip over that for this
22 morning's presentation.
23 Let me just briefly highlight how this
24 proposal is different from what was originally
25 proposed to you. And I think you can
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September 26, 2000
1 essentially characterize it as three or four
2 major changes from the original draft.
3 First, the draft that we proposed in July
4 was essentially comprised only of institutional
5 investment products. There was no bundled or
6 mutual fund style investment products
7 contemplated in that draft.
8 Furthermore, the draft did not speak
9 extensively to the education program that will
10 be provided as part of this program. Nor did
11 it speak extensively to the investor
12 selection -- investment manager selection, or
13 termination process, and how we would
14 anticipate going through there.
15 Furthermore, there were a number of
16 proposed investment products that were outlined
17 in that particular draft that have subsequently
18 been revised. And as we get into the
19 discussion of this, if you would look at page 7
20 of your draft Investment Policy Statement, you
21 will see the list of investment options.
22 And we have used the legislative style of
23 editing here, so the new language is
24 underlined, old language is struck through.
25 And those comments that are in bold red are the
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1 most recent series of amendments that were
2 disseminated yesterday.
3 The amendments that were disseminated
4 yesterday, by in large stem from discussions
5 that we had at the Cabinet Aides meeting last
6 week, and are really intended to clarify the
7 previous draft, not intended to provide
8 extensive substantive revision.
9 So we have now added to the original draft
10 one bundled provider in response in part to the
11 recommendations and motions adopted by both of
12 the advisory councils; we have elaborated
13 significantly on the education program; on
14 manager selection and termination; and we have
15 restructured slightly the investment products
16 themselves that we propose to offer, largely in
17 response to our consultants' recommendations.
18 For example, we had originally proposed a
19 real estate investment product, that's been
20 deleted, and so on.
21 What we are recommending to you this
22 morning is that you give your initial approval
23 to this draft, which will allow us to move
24 forward with the rulemaking process.
25 We anticipate coming back to you in
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1 November for the official notice of rulemaking,
2 and then again in December when you will
3 actually be called upon to adopt the rule in
4 its final version.
5 In the meantime, we will have public
6 workshops. There's one previously scheduled
7 for October 13th. So we will take additional
8 public testimony at that time.
9 But it's important that you give us some
10 direction at this point in order for us to be
11 able to proceed with the other implementation
12 steps that are so vital. We have to move
13 forward on the third party administrator, we
14 have to move forward to create the selection
15 criteria for the investment products, and
16 so forth. And we really can't do much of that
17 without some direction from you.
18 So that, in -- in essence, is where we are.
19 Let me just very briefly highlight that on the
20 summary sheet that we passed out that
21 summarizes the amendments on just one page, we
22 have a slight typo. We had a Roman numeral IV,
23 it should be Roman numeral VII. But the
24 content has not changed at all.
25 And with that, Governor, and members of
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September 26, 2000
1 the Board, we do have a fairly long list of
2 folks who would like to speak. We have
3 admonished them to keep it to 3 minutes apiece.
4 I have a cattle prod that I brought with me
5 from -- picked up on the way over here from --
6 from Tallahassee --
7 GOVERNOR BUSH: Tom --
8 MR. HERNDON: -- so we can keep everybody
9 on track.
10 If that's your pleasure, we can move right
11 into that -- and if you would like the
12 presentation, we can do that. But in the
13 interest of time, we'll move into that.
14 All right. We do have a -- an order. And
15 the first person that we have up is Tom Cerra
16 and Georgia Slack, on behalf of the Independent
17 Retirement Commission.
18 GOVERNOR BUSH: On behalf of whom?
19 MR. HERNDON: The Independent Retirement
20 Commission.
21 MR. CERRA: Good morning, Governor, State
22 Board members.
23 Governor, first of all, I have to
24 apologize. I didn't know the game plan. I
25 stayed in Tallahassee last night. But I did
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September 26, 2000
1 buy a cup of coffee down the street this
2 morning.
3 My name is Tom Cerra. I'm the
4 Executive Director of the Independent
5 Retirement Commission.
6 By now, most of you have heard of the IRC.
7 It's a coalition of state education
8 associations representing 240,000 teachers,
9 more than 350 School Board members,
10 67 superintendents, and 120 -- 1200 school
11 administrators.
12 Their combined voices were in large part
13 responsible for the birth of the new ORP in our
14 retirement system.
15 They wanted change, they wanted
16 modernization, they see it as a way to fill
17 Florida's classroom with the critically needed
18 teachers. They see the ORP as a low cost,
19 effective tool in addressing Florida's growing
20 shortage of qualified teachers.
21 More than that, they see it as putting our
22 classroom teachers on the same professional
23 level as university faculties, legislators, and
24 senior management.
25 If it is good enough for the professors in
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September 26, 2000
1 the university classrooms, it's good enough for
2 the teachers. And if those university faculty
3 members have a broad choice in investment, then
4 so should the teachers and other educational
5 personnel.
6 This proposed policy will not accomplish
7 that. It will not treat our public school
8 folks and other State employees with the same
9 trust and respect that you have for university
10 people, and that we have for you as State
11 elected decision makers.
12 More choice is essential if this program is
13 to successfully meet the needs of our public
14 school employees. We are well aware of the
15 cost statistics that are being used to limit
16 choice. But we know that competition
17 inherently will drive these costs down.
18 Mr. Herndon and his staff have been great
19 in terms of including us in the mammoth task of
20 implementing this new program. Make no mistake
21 about that. We are very appreciative of his
22 open door policy regarding listening to our
23 positions and including us in the decision
24 making process.
25 We are in agreement with most of SBA's
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September 26, 2000
1 positions. This one, albeit a major one, is
2 one that we strongly disagree. We appreciate
3 the fact that they have moved slightly toward
4 our position by amending the proposed
5 Investment Policy to include that one bundled
6 provider.
7 It's not enough. It's like offering us the
8 difference between chocolate and chocolate chip
9 ice cream. We want a little more. We want to
10 throw in some additional players, a little more
11 vanilla, strawberry, and maybe even pistachio.
12 We want reasonable choice. We believe that
13 that is the intent of the legislation. We know
14 it is, because we've been there since its
15 inception. We can't stress our position
16 enough.
17 The competitive nature of a truly open
18 program will create price pressures on each
19 investment provider so that our employees will
20 receive significant value for the products and
21 services they receive.
22 Our goal is to modernize the Florida
23 Retirement System and use it as a recruitment
24 tool.
25 We urge you to listen to your Advisory
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September 26, 2000
1 Committees, give us more choice, give us
2 multiple bundled providers.
3 Thank you very much.
4 MR. HERNDON: Diane Porter with Leon County
5 Teachers Association was going to be here this
6 morning, but was unable to make it at the last
7 minute.
8 The next speaker that we have is
9 Dr. Keith Baker with Tax Watch.
10 DR. BAKER: Thank you, Tom.
11 GOVERNOR BUSH: Welcome, Dr. Baker.
12 DR. BAKER: Good morning, Governor, and
13 members of the Board.
14 Dominic Calabro, our President,
15 Chief Executive Officer, could not be here this
16 morning. But he asked me to extend to each of
17 you his personal regards and regrets. He could
18 not reschedule a long-standing item on his
19 agenda.
20 Florida Tax Watch has released two reports,
21 perhaps some of you may have seen them, one in
22 April of 1999, and another in April of the year
23 2000 --
24 GOVERNOR BUSH: Doctor, could you just hang
25 on a second?
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September 26, 2000
1 Can anybody hear back there?
2 Sorry that I didn't ask before.
3 Maybe if you could speak closer to the
4 mic --
5 DR. BAKER: I'll get a little --
6 GOVERNOR BUSH: -- and get --
7 DR. BAKER: -- closer to the mic.
8 As I was -- as I was saying, we've issued
9 two reports in recent years, in the last
10 two years, on optional retirement. And our
11 goal in releasing these reports was to provide
12 a strategy to enhance Florida's public
13 employers' competitive position to attract and
14 train a high quality work force, without adding
15 billions of dollars in current and long-term
16 taxpayer costs and liabilities.
17 We would like to commend the SBA for its
18 work in implementing this new Optional
19 Retirement Program, and for recognizing the
20 need for flexibility and some form of bundling.
21 Florida Tax Watch does not think, however,
22 that the ISP, as drafted by SBA staff, goes far
23 enough in allowing for adequate options for
24 both current and future employees who may opt
25 for the defined contribution plan.
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1 There are some important reasons why we
2 have to ensure that participants have ample
3 options and flexibility in the new retirement
4 system.
5 First, it is mandated by law; it's the
6 underlying principle behind defined -- behind
7 defined contribution plans; and, lastly,
8 participants' life circumstances are likely to
9 change. And, therefore, their retirement
10 planning options need to be flexible.
11 And, of course, no one knows a person's
12 unique retirement needs better than that
13 individual themself, or herself.
14 If an employee feels that he or she can't
15 beat the return offered by the DB plan by
16 making their own investment choices, then they
17 should be given as many tools as practical to
18 be successful.
19 If they are not comfortable with managing
20 their own investments and the associated risks
21 and -- and costs of doing so, then perhaps a DC
22 plan is not for them.
23 Further, in a DC plan, while costs are
24 important, choice and education are paramount
25 considerations. They are -- liability in a DC
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September 26, 2000
1 plan should be placed on the participants, not
2 the State and the taxpayers of Florida.
3 And if participants have the liability, the
4 State should not control and limit the options
5 and products available to them.
6 The appropriate role of the SBA is to
7 empower plan participants with timely and
8 accurate information about their investment
9 options, their products, and performance.
10 Implementation of the new public employee
11 retirement system will be watched closely in
12 the context of what Florida does. And
13 Florida's position -- the position it takes
14 could serve as a model for other government
15 retirement plans. And likely, will be looked
16 at very closely, and -- and emulated.
17 We commend you for trying -- for taking
18 this positive step, and we urge you to make the
19 best program possible, one that's portable,
20 competitive, and market driven.
21 GOVERNOR BUSH: Thank you.
22 DR. BAKER: Thank you.
23 MR. HERNDON: The next speaker that we have
24 is Mal Campbell from TIAA-CREF.
25 MR. CAMPBELL: Good morning, Governor Bush,
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September 26, 2000
1 members of the Cabinet.
2 Steve Metz last week told me what you said,
3 Governor Bush, a week or so ago at your last
4 Cabinet meeting about --
5 GOVERNOR BUSH: I forgot.
6 MR. CAMPBELL: -- bringing folks down to
7 Panama City.
8 GOVERNOR BUSH: Okay. Yeah.
9 MR. CAMPBELL: So in that -- about half of
10 them -- no. I brought two -- two folks from
11 New York --
12 GOVERNOR BUSH: We're grateful.
13 MR. CAMPBELL: -- three folks from Tampa in
14 our Tampa office, and one folk from -- from
15 Tallahassee. That's Steven Metz himself.
16 GOVERNOR BUSH: You get Brownie points for
17 that.
18 Congratulations.
19 MR. CAMPBELL: TIAA-CREF applauds the
20 changes made by the SBA staff in the
21 September 19th revised Investment Policy
22 Statement.
23 Adding a bundled provider to the otherwise
24 unbundled architecture of the P-E-O-R-P is
25 consistent with the enabling legislation, is
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September 26, 2000
1 responsive to the recommendations made by the
2 SBA Investment Advisory Council, and the
3 P-E-O-R-P Advisory Committee on September 14th.
4 And we provided comments to both of those
5 advisory committees. And, in fact, I believe
6 you have briefing books in front of you right
7 now which have some of the materials which we
8 provided to those committees.
9 And indeed, General Milligan, I would call
10 your attention to Tab 4 of the book, which has
11 a discussion of the DB to DC transition that
12 you -- which you had raised some concerns
13 about, and Tom Herndon had a consulting firm
14 address.
15 In Tab 4, we also address that, and suggest
16 that if TIAA-CREF were selected down the line,
17 that there would be no difference in the
18 changes -- or the charges that would occur as a
19 result of the transition, that we'd be able to
20 enter into the same kinds of transactions.
21 It was a very good point you raised,
22 General Milligan.
23 Our strong suggestion that the P-E-O-R-P
24 give Florida public employees access to a
25 bundled provider, now embraced by the SBA
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September 26, 2000
1 staff, is based on over 80 years experience as
2 the largest and oldest company available to
3 public education employees in all 45 states
4 where optional retirement plans are now in
5 existence, including here in Florida, where you
6 have the university system and community
7 system -- community college ORPs.
8 And they're based -- all of them --
9 virtually all of them are based on the bundled
10 design, where a company, such as TIAA-CREF,
11 provides a bundled array of services, including
12 recordkeeping, administration, counseling, and
13 education, a diversified mix of investment
14 options, as well as annuities and settlement
15 options at the retirement stage.
16 We look forward to the opportunity to share
17 some of that experience and knowledge with the
18 staff of the SBA and the upcoming rulemaking
19 workshops on the revised P-E-O-R-P Investment
20 Policy Statement.
21 For instance, among the -- we would
22 suggest, and we will suggest, that a guaranteed
23 option, such as TIAA Traditional, be included
24 among the investment vehicles offered by the
25 bundled provider.
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1 For purpose -- for participants who want
2 part of their retirement money allocated to a
3 stable value fund, with the stability and the
4 guarantees -- excuse me -- who -- who want part
5 of their money in a stable value fund, this
6 option will generally produce significantly
7 higher returns than a money market fund with
8 the stability and guarantees that a bond fund
9 cannot offer.
10 For example, TIAA Traditional currently
11 credits 8 percent. Money markets are in the
12 5 percent range. So you're talking about a
13 300 basis point improvement by having a
14 guaranteed option amendment.
15 We've attached a -- a chart that shows that
16 some 30 percent of the assets of the State
17 University System ORP that we manage currently
18 are in the Traditional fund.
19 Of course, the trade-off for superior
20 returns, like the delta between 5 -- 5 percent
21 and 8 percent, is some limitation on
22 withdrawals.
23 But that is a trade-off that folks are
24 willing to address if they're told about it up
25 front.
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September 26, 2000
1 Again, we welcome any questions that you
2 might have.
3 We thank you, and we --
4 GOVERNOR BUSH: Could I ask --
5 MR. CAMPBELL: -- think the --
6 GOVERNOR BUSH: -- you a question?
7 MR. CAMPBELL: Yes, sir.
8 GOVERNOR BUSH: The legislation, as I
9 understand it, required a third party
10 administrator; required a -- an education
11 component, which I believe is separate, Tom?
12 MR. HERNDON: (Nodding head.)
13 GOVERNOR BUSH: And I -- what I've not
14 understood, because I've -- I've met with a lot
15 of the bundled providers, and I'm still a
16 little confused about your -- you're proposing
17 providing these services in a bundled fashion,
18 the equivalent at least of educating -- that's
19 part of the sales pitch, isn't it, that you
20 would be able to -- on a one-on-one basis, sell
21 your array of financial services to the -- to
22 the member of the retirement system, and that
23 you could provide many of the functions, if not
24 all the functions, of the third party
25 administrator components. And for that,
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September 26, 2000
1 you know, people pay for that extra -- extra
2 service.
3 But we're already paying for it, we're
4 already going to contract out that.
5 How -- how did --
6 MR. CAMPBELL: Well, part -- part of
7 that -- Governor, part of the issue here is
8 where you have not seen the total architecture.
9 We haven't seen what the third party
10 administrator is for -- or providing.
11 But clearly, the staff has now recognized
12 that a bundled provider could fit within that
13 framework, and provide supplemental services
14 that would be of benefit -- of value, as the
15 Legislature suggested.
16 Not going to do the basic enrollment, not
17 going to do the basic recordkeeping for
18 everyone else.
19 GOVERNOR BUSH: Okay.
20 MR. CAMPBELL: But for your own
21 participants, clearly, you would do
22 recordkeeping for them; you would have your
23 24-hour call lines; you'd have your counseling;
24 you have all of the other features that are
25 available right now on the campuses at the
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September 26, 2000
1 university system.
2 But they would be supplemental to what the
3 third party administrator does.
4 GOVERNOR BUSH: General?
5 COMPTROLLER MILLIGAN: You may not be the
6 right one to answer this question.
7 But I presume that the providers of the
8 institutional products referred to here in
9 Tier I, II, and III, could also provide some
10 limited services.
11 MR. CAMPBELL: I would defer to the SBA
12 staff.
13 But as I've heard it at their two public
14 hearings so far, the institutional fund
15 managers that they intend to hire will just
16 manage that cohort of funds that they receive.
17 There'll be submanagers --
18 COMPTROLLER MILLIGAN: But not --
19 MR. CAMPBELL: -- no, sir --
20 COMPTROLLER MILLIGAN: -- nothing to
21 preclude them.
22 Tom, maybe you want to address it.
23 MR. HERNDON: I think part of the answer
24 is -- it's a function of the kind of services
25 we're talking about. I'm not sure that an
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1 institutional manager, for example, would
2 necessarily be providing educational services,
3 but would be certainly providing some
4 administrative services to support the
5 valuation of their particular product, and so
6 on and so forth.
7 So I think, to a degree, as Mal has
8 indicated, that the overall architecture is not
9 completely fleshed out, in part, depending on
10 where you all --
11 COMPTROLLER MILLIGAN: And -- and while --
12 and clear-- and clearly, they could provide --
13 would provide financial advice --
14 MR. HERNDON: Yes.
15 COMPTROLLER MILLIGAN: -- which is part of
16 the educational process, I presume.
17 MR. HERNDON: Financial information.
18 COMPTROLLER MILLIGAN: Or financial
19 information.
20 MR. HERNDON: Right.
21 COMPTROLLER MILLIGAN: Okay.
22 GOVERNOR BUSH: Okay.
23 MR. CAMPBELL: Thank you.
24 GOVERNOR BUSH: Thank you very much.
25 If I could ask the -- the next speakers to
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1 use English in their presentations, instead of
2 acronyms. Frankly, I don't remember every one
3 of these things, and I'm the Governor. I'm
4 assuming that the people that are interested in
5 this, not everybody knows what a peork is, or
6 whatever these things are called.
7 So if y'all could use English, or describe
8 what it is or define it first, and then -- so
9 everybody'll understand, it's -- it's one of my
10 pet peeves. You just have to hang in there
11 with me on it.
12 TREASURER NELSON: Hey, good luck, Jeb.
13 MR. HERNDON: The --
14 GOVERNOR BUSH: I'm not giving up.
15 I'm losing, but I'm not giving up.
16 MR. HERNDON: The next speaker is
17 Curt Kiser on behalf of VALIC.
18 GOVERNOR BUSH: Senator Kiser. Appreciate
19 it --
20 MR. KISER: Good morning. Thank you,
21 Governor, and members of the Board.
22 I represent VALIC, and have for the last --
23 GOVERNOR BUSH: Is that an acronym?
24 MR. KISER: No. That's the actual name of
25 the company.
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1 GOVERNOR BUSH: Okay. Thank you.
2 MR. KISER: They are a subsidiary of
3 American General. And we have represented them
4 for the last three years, during the whole
5 legislative history of the enactment of the
6 Optional Retirement legislation.
7 We appreciate very much the role that you
8 all played in implementing this great new
9 program. And we are concerned at this time
10 that legislative intent has been lost in the
11 investment policy.
12 I would very much -- and members of our
13 company and others -- would very much like to
14 talk you more in-depth about the very questions
15 you just asked, Governor, because we think that
16 really gets into the heart of how the program
17 is supposed to operate, the level of service
18 that people are supposed to get, the kinds of
19 services people get.
20 But unfortunately, we don't have that time
21 in the -- in the time limit we have here.
22 And -- but it's really something that you need
23 to get to the bottom of, because we think
24 there's a great difference between the level of
25 financial information that a prospective
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1 employee gets, particularly when it comes to
2 the details of their own financial life, their
3 own financial planning, where they want to go,
4 and exactly what kind of assets they have.
5 These institutional managers are not going
6 to provide that kind of advice,
7 General Milligan. Those are by financial
8 planners. And that's not going to be offered
9 by the institutional people.
10 That's why we think the services that these
11 bundled providers have address that very point.
12 And that's also exactly the same reason why we
13 think there should be more than one, because
14 different company (sic) offer different
15 approaches and different levels of service for
16 just those sort of things.
17 And the SBA ought to have a wide --
18 The State Board of Administration,
19 Governor --
20 GOVERNOR BUSH: Temporary --
21 MR. KISER: -- ought to have those sorts of
22 choices available to choose. To say only one
23 bundled provider is going to be chosen, first
24 of all, goes against what the statute calls
25 for.
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1 The statute says one or more. And
2 virtually every draft of every bill from the
3 House and the Senate and the various sponsors
4 that -- that played a role in this legislation,
5 as far as I can remember, never limited it to
6 one. They always spoke in terms of a number
7 that would be picked.
8 The State university system and the
9 community college system that has had this -- a
10 plan similar to this, of an Optional Retirement
11 Plan, since 1983, has five bundled providers.
12 So why should those people get to pick from
13 five choices, and these people are being
14 limited to one?
15 Why do you even need to limit yourself
16 right now to only one? Why not track the
17 statute? One or more. Then go through the bid
18 process. See what the bids produce, see how
19 creative, see how -- how sharp of pencils they
20 are. Make that decision at a later point in
21 time, not now.
22 How would you like to be sitting in this --
23 in this role three, four, five months from now,
24 and get three, four, or five excellent
25 proposals, each one taking a little different
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1 approach, different levels of service. And
2 you're saying, oh, gosh, I only get to pick
3 one.
4 Why? Because I put myself in a box back in
5 September.
6 That is not the way you should do it, in my
7 opinion. You need to leave yourself as much
8 flexibility as you can get. Track the statute.
9 If only one decent proposal comes in, fine,
10 you're within the law to pick that one. But
11 why cut it off now?
12 And let's think about it just for a minute.
13 In three years of legislation -- of history, if
14 the Legislature wanted to limit this program to
15 one, they'd have said so. But they didn't.
16 And we would suggest, that's a -- that's
17 a -- that you have something you should pay
18 attention to, and try to track legislative
19 intent as close as possible, and don't limit
20 yourself to one.
21 You're not going to be doing yourself a
22 favor, or the State employees. VALIC as a
23 company, has over 250,000 clients in this state
24 right now. Over 60,000 of those people will be
25 eligible for this program.
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1 And not once in the company's memory can
2 they recall one employee or one client coming
3 in and saying, oh, you've given me too many
4 choices, cut back. That hasn't happened.
5 So I don't know who we're trying to protect
6 here, but I think choices is the way you need
7 to go.
8 GOVERNOR BUSH: Yes, General.
9 COMPTROLLER MILLIGAN: Quick question,
10 Curt.
11 Obviously you have participated in this
12 process, and it has been moving down a -- a
13 fairly quick track, just to meet really a very
14 tight time line --
15 MR. KISER: Right.
16 COMPTROLLER MILLIGAN: -- and the end
17 product.
18 As I understood Tom earlier, and as I
19 understand what we are doing today, and to
20 quote his words, we would be approving initial
21 approval of -- initial approval of a draft for
22 rulemaking.
23 This does not lock anything into concrete,
24 as I see it.
25 Do you agree with that?
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1 I mean, we're going to go through a
2 rulemaking process.
3 MR. KISER: Exactly.
4 COMPTROLLER MILLIGAN: And -- and we need
5 to move this process forward, and -- and not
6 dance on the head of a pin here.
7 MR. KISER: Right.
8 COMPTROLLER MILLIGAN: But rather, let's
9 move forward and get more public comment,
10 and -- and resolve some of these issues that
11 you legitimately raise.
12 MR. KISER: That's certainly one
13 perspective on it.
14 But the other is, why make it an issue now
15 at all? Why not let's get rid of that issue.
16 Let's just leave it open. One or more. We'll
17 be done with that issue. Then we can fight
18 about the more -- other more important aspects
19 of the -- of the policy statement.
20 COMPTROLLER MILLIGAN: Thanks.
21 GOVERNOR BUSH: But there is no limitation.
22 Just to confirm it, there is by passing this as
23 it is right now -- what I'd like -- I'd like
24 Tom to confirm this -- that if what you say is
25 true, and it's a compelling argument, if -- if
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1 three bundled providers came in, and because
2 you may have a base of support or a base of --
3 cust-- a customer base already, and because
4 this may be a lucrative market, you know, that
5 may want to lower your -- your prices to get
6 into the game.
7 And if two or three bundled providers do
8 that, we are not restricted by moving forward
9 today, Tom, are we?
10 We could accept those -- those choices
11 because they're in the best interest of the --
12 of the retirees -- or the members of the
13 retirement system.
14 MR. HERNDON: What we would contemplate is
15 proposing through the RFP process a
16 solicitation that solicits bids on
17 institutional products and a bundled product,
18 do the analysis, do the cost comparisons, do
19 the performance comparisons, do the service
20 comparisons, and so forth, and come back to you
21 with a recommendation.
22 The recommendation clearly is reviewable by
23 the Board. You can at that future date make
24 any decision that you care to make.
25 We are aiming towards one, but that is not
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1 the final conclusion, and that decision would
2 be left up to the Board.
3 TREASURER NELSON: Governor, can I ask --
4 GOVERNOR BUSH: Yes. Please.
5 TREASURER NELSON: Tom, would you trace for
6 us --
7 Tom, would you trace for us the initial
8 staff recommendation was not to have any
9 bundled. And then that was amended to have
10 your initial investment options through the SBA
11 staff, plus one bundled provider.
12 Trace for us the evolution of your thinking
13 there.
14 MR. HERNDON: Our very strong impression is
15 that one of the most critical drivers in this
16 process is cost, cost to the members as a
17 function of the fees that are charged by the
18 investment companies, broadly using that term.
19 For that reason, and coupled with the fact
20 that our overall impressions, which I think
21 we've been reporting on for some time, is that
22 active management does not, as a general rule,
23 add much value, led us to believe that a single
24 set of institutional products that were very
25 low cost in nature was the best recommendation.
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1 Both advisory councils essentially said,
2 that's not enough, you need more choice. That
3 was ten choices at that time, add a bundled
4 provider, or more -- and the statute does
5 certainly say one or more.
6 And that gave rise ultimately to our
7 recommendation now to have a set of
8 institutional products, twelve in all, and nine
9 within the umbrella of the bundled provider.
10 We're still following very much the
11 principals of trying to find the best of class.
12 We believe that the best business practice is
13 to try and select the best set of vendors for
14 the population to be served.
15 In this case, we would try and select the
16 best vendors for the twelve institutional
17 products, and the best vendor for a bundled
18 product, 21 investment choices in all.
19 Following that theory, it was our belief
20 that while the statute said one or more, that
21 didn't necessarily require that. What it gave
22 us latitude to do was to have the best in class
23 institutional product, the best in class
24 bundled providers.
25 So that's where we are this morning.
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1 TREASURER NELSON: What is the norm among
2 major pension funds in the country?
3 How do they handle it?
4 MR. HERNDON: I think as a general comment,
5 the trend in the industry is moving away from
6 the bundled providers, especially for the large
7 plans.
8 It is to some degree a function of size of
9 the plan, and the resources that are available
10 to the plan.
11 And Nancy Williams, a Mercer consultant
12 who's under contract to the Board, I think will
13 also speak to this.
14 But I think, as you look across the public
15 and private sector throughout the country, you
16 see small plans who need full service hiring
17 bundled providers. Larger plans who can go out
18 and disaggregate the services that the bundled
19 provider obtains or provides at a lower cost
20 is -- are doing that.
21 So you see large corporate plans, you see
22 large public plans doing just that,
23 subcontracting out for third party
24 administration, subcontracting out for
25 education, subcontracting out for investment
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1 services; and then they put those services
2 together because they can do it at a lower
3 cost.
4 That, I think, is the general rule around
5 the industry.
6 The comment is made about the ORP plans and
7 the university system. When the university
8 system ORP plan was crafted 15 years ago,
9 20 years ago, that was the best thinking in the
10 industry at the time. I think the best
11 thinking has moved on and moved away from that
12 kind of -- of plan now.
13 But it was certainly appropriate at the
14 time.
15 TREASURER NELSON: Among the major
16 corporations in America that employ this
17 particular variety that you're speaking of, are
18 we hearing any accolades, any objections from
19 the -- the employees that these pension plans
20 and their retirees serve?
21 MR. HERNDON: I'm not personally familiar
22 with any research. Nancy may be able to speak
23 to this when -- when she gets up.
24 But we do know in looking at large
25 institutional plans, public and private across
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1 the country, that less than 20 percent offer
2 more than 12 choices to their members. They
3 know, as do we, that choice is a two-edged
4 sword sometimes. And I know that's a difficult
5 concept to -- to accept.
6 But too many choices can, in fact, cause
7 paralysis; too many choices can, in fact, cause
8 people to say, I don't understand what -- what
9 we're getting into.
10 And remember, the most important decision
11 that people can make here is to pick the right
12 plan, DB or DC. We don't want paralysis to
13 cause them to default into the DB plan because
14 they are -- they are uncertain about what to
15 do. And that's the way the law reads.
16 They'll default automatically into the
17 DB plan. And that's not the right choice for
18 an awful lot of people.
19 So we've got to be very careful. It's --
20 it's -- it is truly a difficult proposition.
21 But --
22 TREASURER NELSON: On a going-forward basis
23 on new employees, what percent do you think
24 will pick the defined contribution versus the
25 defined benefit?
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1 MR. HERNDON: We are in the process of
2 soliciting actuarial estimates from two
3 different firms. We have a set of actuarial
4 estimates from one of the firms that is under
5 contract to the Board.
6 I think our expectations, and theirs, are
7 that over time, as the program stabilizes, as
8 people become more familiar with it, a
9 significant percentage, well in excess of
10 50 percent, will pick the defined contribution
11 option.
12 For an awful lot of people, that's the
13 right place to be. And we've said that and
14 endorsed that since the very beginning.
15 The other point that I would make with
16 respect to this choice question -- I know you
17 didn't ask this question, but if I can impose
18 on your grace for just a moment.
19 It is much, much more difficult to get the
20 genie back in the bottle, than to let him out
21 gradually a step at a time.
22 If we had 50 or 100 choices, and people,
23 through no fault of their own, wind up with a
24 manager who performs well, getting assets out
25 of that manager's hands and into another
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1 manager's hands is exceedingly difficult to do.
2 We can always add choice. And the plan
3 contemplates on a regular basis evaluating the
4 choices and making sure that we are offering a
5 full pathway of services to the members.
6 TREASURER NELSON: That being the case, why
7 did you make the amendment to your initial
8 rec-- recommendation going to one bundled plan?
9 MR. HERNDON: The argument that we've heard
10 is that we foreclosed on the comparison, we
11 precluded a thoughtful analysis between
12 institutional products and a bundled provider.
13 We accept that. I mean, there's a certain
14 amount of accuracy to that -- to that position.
15 So what we've tried to do is we've tried to
16 contrast, as squarely as we can, nine
17 institutional products, up to nine products
18 under a bundled provider arrangement. And you
19 still have -- you have three of these lifestyle
20 or balance funds that are sitting out here that
21 we -- we think should be set aside.
22 But you've got squarely contrasted
23 nine bundled, nine institutional. Let's go
24 through a very rigorous selection process and
25 see what the end result is. Let's operate them
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1 for a while, and then we'll see.
2 We'll let the marketplace decide where the
3 resources will go, because people will migrate
4 to where they get the best return at the lowest
5 cost with the best performance. I mean, we --
6 we certainly agree with that.
7 But that gives you a clear picture. That's
8 the best in class bundled provider, and it's
9 the best in class institutional products. And
10 we don't think public employees should settle
11 for anything less than that.
12 TREASURER NELSON: Thank you, Governor.
13 GOVERNOR BUSH: General.
14 COMPTROLLER MILLIGAN: Since the issue was
15 raised on defined benefit versus defined
16 contribution, maybe a point to jump in on this.
17 To the credit of the -- both
18 advisory councils, who have done a really
19 terrific job; and to the SBA; and for that
20 matter, to the industry folks that have
21 participated, they really have attacked this
22 thing and -- and -- and washed things pretty
23 well.
24 But I continue to have concern that we have
25 a responsibility to both the defined benefit
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1 side and to the defined contribution side. And
2 you asked how big was this going to be. And
3 Tom indicated ultimately upwards of 50 percent.
4 But initially they're talking about
5 somewhere in the 15 billion dollar range that
6 could move out of the FRS from the defined
7 benefit to the defined contribution.
8 And trying to get assurances from Tom that
9 with our fiduciary responsibilities, that what
10 we have put together here in this statement
11 is -- minimizes, for lack of a better term, the
12 impact on the defined benefit side.
13 And -- and I guess that's my question to
14 you, Tom.
15 And I feel comfortable that we, in a
16 fiduciary sense, have minimized the impact on
17 the defined benefit.
18 MR. HERNDON: General, you've -- you've
19 been very diligent in pursuing this issue.
20 We've provided you with some information on
21 this question, and yesterday -- and I apologize
22 for the lateness of it.
23 But yesterday we also distributed comments
24 on this question from the two consultants that
25 were prepared to address it. Both Mercer and
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1 Callan have -- have addressed this question.
2 There's no doubt that as a general
3 comment -- and I need to be certain to say
4 that -- transition costs may be slightly higher
5 going into the mutual fund style, bundled
6 product style home, simply because their policy
7 has always been cash out, and then cash in.
8 We recognize that. You heard TIAA-CREF
9 indicate, for example, that they would do their
10 very best to accommodate what we would
11 characterize as kind of in-kind transfers.
12 But we can, we think, manage that process
13 to ensure that the costs are appropriately
14 borne by the members of the plan who
15 voluntarily seek that cost.
16 In other words, if they make a choice to go
17 a bundled provider direction, there may very
18 well be a higher cost associated with that
19 movement, but it should be borne by that
20 individual or that set of individuals, and not
21 by the whole plan in its entirety.
22 Now, the financial services industry is a
23 highly quantified industry, and, in fact, wears
24 the label quants quite proudly at times.
25 But it's not so precise that -- that I can
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1 guarantee you every penny will be accounted
2 for, but we will certainly do our utmost. And
3 we put some amendatory language in here to try
4 and address that, General.
5 COMPTROLLER MILLIGAN: So -- and -- and I
6 appreciate that, and I have read the language,
7 and I'm satisfied with the language.
8 What I think I heard you say though, that
9 if we go to more and more bundled providers, we
10 extend the risk in terms of the impact on the
11 defined benefit side of the house.
12 MR. HERNDON: I think -- I think as a
13 general comment, that's probably accurate.
14 I think one comment --
15 COMPTROLLER MILLIGAN: So coming out of the
16 blocks in a conservative sense, one provider
17 may not be such a bad idea just to expand the
18 market, the opportunities, but at the same
19 time, worry about the DB folks, at least
20 initially --
21 GOVERNOR BUSH: Didn't he just say that the
22 individual that made the choice --
23 COMPTROLLER MILLIGAN: No.
24 GOVERNOR BUSH: -- would be --
25 COMPTROLLER MILLIGAN: Don't know that yet.
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1 MR. HERNDON: We're going to do our utmost
2 to make sure that costs are allocated in that
3 fashion.
4 Frankly, one of the things that -- that
5 this experience -- this process is doing is
6 also, I think, causing the industry to rethink
7 their position in some of these instances.
8 Now, I wouldn't be a bit surprised if this
9 proves to be a deterrent to the bundled
10 provider community, that they'll start to
11 address this over time. And that's a very
12 appropriate thing to -- to have happen.
13 COMPTROLLER MILLIGAN: But if I understood
14 you, Tom, again, this is a draft, could very
15 well change during the rulemaking process; and
16 when it comes back to us in six months or so,
17 could include multiple bundled providers, for
18 that matter.
19 MR. HERNDON: It's certainly possible that
20 that's the case. I don't want to preclude that
21 possibility.
22 GOVERNOR BUSH: Commissioner.
23 TREASURER NELSON: Governor, I want to pick
24 up on something Bob said.
25 Tom, would you or your General Counsel
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1 define for us any nuances on our fiduciary
2 responsibility. We clearly discussed this
3 ad infinitum over the issue of the divestiture
4 of the tobacco stocks and what was our
5 fiduciary responsibility.
6 Would you enlighten us with regard to this
7 particular decision?
8 MR. HERNDON: Well, I -- I would certainly
9 defer to Doc Schow, our General Counsel, is
10 with us here.
11 But I think he would probably tell you the
12 same thing that I'm going to say to a degree,
13 and that is that your fiduciary responsibility
14 still applies here, and applies to a
15 substantial degree perhaps even -- even more
16 intensely. The statute for the defined
17 contribution plan does incorporate your
18 fiduciary duties.
19 It very clearly says you must act as a
20 prudent expert, you must perform the due
21 diligence, you must go through the process of
22 analyzing your options very carefully,
23 soliciting advice from all parties, and
24 ultimately your obligation is to act in the
25 exclusive best interest of the members. Not in
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1 anybody else's best interest, but exclusively
2 in the best interest of the participants in the
3 plan.
4 And I don't know whether, Doc, you would
5 add anything more to that?
6 MR. SCHOW: The only other thing, Tom, is
7 we do have to go before the IRS and get a
8 private letter ruling --
9 MR. HERNDON: Yes.
10 MR. SCHOW: -- that it does not harm the
11 DB plan.
12 MR. HERNDON: Yes.
13 MR. SCHOW: And it is also tax exempt on
14 the DC plan.
15 MR. HERNDON: That's correct.
16 And both of those opinion letters, by the
17 way, are scheduled to go up to Washington the
18 end of this week. So --
19 GOVERNOR BUSH: We have a few more people
20 that are --
21 MR. HERNDON: Yes.
22 GOVERNOR BUSH: -- interested in speaking.
23 MR. HERNDON: We do.
24 Charlie Dudley from SunAmerica.
25 Not here.
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1 Okay. Is this --
2 Aetna Financial Services, Joe McClain.
3 MR. McCLAIN: Good morning, Governor, Board
4 members.
5 I'm Joe McClain from Aetna Financial
6 Services. And I guess after the presentation,
7 I want to go back to our home office and change
8 to Strawberry Financial Services just to be
9 included in this mix that we keep hearing --
10 GOVERNOR BUSH: Can you speak a little
11 louder so everybody can hear you in the back?
12 MR. McCLAIN: Yes, sir.
13 GOVERNOR BUSH: The reason no one laughed
14 at that was because they couldn't hear you.
15 MR. McCLAIN: The Board laughed, and
16 I think that was important at this stage.
17 We would strongly encourage the Board to
18 continue to look at choice. I think in answer
19 to Mr. Nelson's question, this is a first step,
20 the state of Florida is the first state, the
21 largest that will be converting from the DB to
22 DC. And we encourage you to consider the
23 choices for the participants.
24 I think if you look around the state on its
25 current basis, with three of the most
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1 successful programs around, the deferred
2 compensation program -- managed at one time by
3 Mr. Gallagher, now with Mr. Nelson -- has a
4 group of bundled investment providers, and is
5 one of the most successful in the country.
6 Again, choice being the market and choice being
7 the key words.
8 If you look at the State University System
9 with the ORP, one of the most successful in the
10 country. And, again, that is a program run by
11 the marketplace, also run by choice for the
12 participants.
13 So as you move forward in this program, we
14 need to remember that large plans have a lot of
15 small people in them, small people from the
16 standpoint of seeking investment advice.
17 So as you -- as you make a global decision,
18 we have to remember that there are
19 650,000 people who will be seeking advice.
20 The bundled investment providers are the
21 people on the ground already in Florida that
22 have relationships with a significant number of
23 these people.
24 So the trust relationship exists, we will
25 do the job for the State, we encourage you
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1 strongly to expand the current language to one
2 or more; or investment providers, an s,
3 whichever way you have to do it to make it more
4 efficient.
5 And we -- we applaud your effort to move
6 forward. But we would also applaud your effort
7 to consider additional choice.
8 GOVERNOR BUSH: Thank you.
9 MR. HERNDON: The next speaker is
10 John Andrew Smith on behalf of First Union Bank
11 and Bencor.
12 MR. SMITH: Good morning, Governor, and
13 Board members.
14 After listening to several speakers, all of
15 which had the central theme of choices to the
16 employee, and lowering costs through
17 competition; and after spending many, many days
18 of my life in a -- in a room such as this in a
19 public hearing, I'll waive my time.
20 MR. HERNDON: The next speaker is
21 Jack Ehnes with Great West Life Insurance.
22 (Attorney General Butterworth exited the
23 room.)
24 MR. EHNES: Good morning, Governor, members
25 of the Board.
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1 I am Jack Ehnes with Great West Life. We
2 provide retirement services to 1.7 million
3 Americans in government retirement plans, and
4 we service 13 State programs.
5 But our focus is primarily on the
6 administrative recordkeeping service, rather
7 than the investment product side.
8 On a personal basis, I just recently came
9 over to the private sector. Actually I worked
10 for 20 years in the public sector, for three
11 state governments. I've been the
12 Insurance Commissioner for the State of
13 Colorado for five years.
14 But more importantly, I've managed both
15 bundled and unbundled retirement plans, kind of
16 see the successes and failures of both
17 approaches. And most recently, I chaired the
18 Board of the Colorado PERA system, our -- our
19 defined benefit plan, the counterpart to your
20 Florida system.
21 So although I do represent an insurance
22 company here today, I guess I'd like to say
23 that my history and work culture has been
24 representing the participant, the consumer, in
25 all of my work activities. I'd like to bring
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1 that perspective to you.
2 You -- it has been already said, you've got
3 an opportunity really to create one of the
4 largest plans in the country. And most
5 definitely, we will all watch this plan very
6 carefully as it -- as it unfolds. We hope
7 it'll be one of the most progressive designs in
8 the country so that other states, as they
9 debate this legislation, follow in your
10 footsteps.
11 The statutes look like they were thoroughly
12 debated, had much input from the community at
13 large here, and they provided an excellent
14 framework for you to finish off the design of
15 the plan.
16 But I guess I'm going to be the contrarian
17 here today. I think everyone that's -- has
18 testified so far, and others may follow me,
19 really have been urging you to increase the
20 bundled system, having more competition and
21 bundled providers.
22 And I guess from my -- my 20 years of
23 experience, I would encourage you to look the
24 other direction, to look to the initial
25 leanings of the investment policy, which was
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1 really a purely unbundled approach reflecting
2 of what I saw as a -- a strong public
3 commitment to a state of the art plan design
4 that used institutional products, low cost
5 options, a high level of control for you over
6 the investment products themselves.
7 And really, although we're talking a lot
8 about costs and product, it is the educational
9 piece that is -- is going to make it or break
10 it for you and your participants.
11 And I've seen over and over again, when we
12 have multiple providers competing and dumping
13 brochures on employees, counseling them on --
14 in competing fashion, it's nice to say, it's a
15 lot of intensive education for participants,
16 but in reality, it's confusing. It really
17 doesn't lead, from my perspective, to good
18 decision making when employees are faced with
19 all of these companies coming at them with
20 their investment educational tools.
21 Also, I would encourage you again to make
22 not just the educational component independent
23 in the sense of the DB versus DC discussion,
24 but also independent in describing the products
25 and getting employees to truly understand
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1 what's an appropriate asset allocation for
2 them.
3 From my perspective, the recent discussion
4 on expanding competing bundled providers is
5 really a step backwards, not forwards in your
6 plan design.
7 I can remember back in the '80 when I
8 started administering deferred comp plans.
9 And, frankly, bundled providers were very
10 popular in those days for two primary reasons.
11 We were dealing always with retail products,
12 low asset basis; and we were dealing with,
13 frankly, unskilled State administrators.
14 It was very common for an employee in
15 either a university environment or a State
16 agency not to have the time, the focus, or the
17 skill to be designing a supplemental retirement
18 plan.
19 And it was wonderful to have an investment
20 company come by and say, here, one-stop
21 shopping. I will dump this on your lap, I will
22 take care of administration, recordkeeping,
23 investment discussion, et cetera. And that
24 worked for many State agencies over the years.
25 But as you've already heard, really the --
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1 the winds are shifting quickly in this area.
2 That's -- that is not in any way the plan you
3 are dealing with here. This is not a
4 supplemental retirement plan, this is the core
5 retirement plan for your Florida public
6 employees.
7 This is what they're going to depend upon
8 for retirement in future years. You have a
9 huge asset base. Obviously you're -- you're
10 going to -- you're wanting institutionally
11 based products, and you don't have the needs
12 for the high overhead that comes from the
13 bundled providers.
14 So it may be a slightly unpopular view to
15 say this today, but I really hope you'll
16 consider looking back at this policy, and
17 strengthening it, again, toward more of an
18 independent product approach, using independent
19 contracts for education, investment, et cetera,
20 and -- and really looking at offering a much
21 more higher value for the participants --
22 GOVERNOR BUSH: I guess by your statement,
23 you can -- we can presume that Great West is
24 not going to bid on the bundled provider
25 elements. But maybe on the third party
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1 administrator?
2 MR. EHNES: Maybe on the third party
3 administration. That would probably work.
4 Thank you very much.
5 GOVERNOR BUSH: Thank you.
6 By the way, I'm a customer, 401(k), and it
7 works real well. And I -- I -- it's an
8 interesting point, because in that, I make the
9 choice of the investment alternatives. You all
10 provide the recordkeeping, and it works quite
11 well.
12 And I think -- I mean, in that sense,
13 you're on the other side of the -- it is a
14 bundled --
15 MR. EHNES: Right --
16 GOVERNOR BUSH: -- offering, and you -- so
17 you do offer that to all sorts of people in
18 America.
19 (Attorney General Butterworth entered the
20 room.)
21 MR. EHNES: Low cost.
22 GOVERNOR BUSH: Low cost. That's why our
23 business took it out.
24 MR. EHNES: Thank you.
25 MR. HERNDON: Just a couple of more,
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1 Governor.
2 Representative Greg Gay.
3 MR. GAY: Members, good morning. Governor
4 John Elleton -- Ellis Bush. Isn't that the
5 right -- for the acronym on the --
6 GOVERNOR BUSH: That's right. I'm a
7 walking acronym.
8 MR. GAY: A walking acronym.
9 It's my pleasure to be here. I hope you'll
10 excuse me this morning. I'm trying to recover
11 from a cold here, and hopefully I won't stumble
12 through this a little bit.
13 What I want to talk to you about this
14 morning is, I've heard how -- what the SBA is
15 talking about. I want to tell you what the
16 Legislature, who wrote this statute, talked
17 about.
18 I'm the Legislature -- legislator who
19 brought this to the attention of the
20 Legislature three years ago, along with
21 Representative Debby Sanderson. Nobody else
22 started this process but us two.
23 And I -- I think Mr. Herndon will verify
24 that, because we brought it -- had several
25 meetings with him back starting three years ago
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1 in the fall in the committee meetings.
2 Now, what I've heard today is that,
3 you know, cost was the overriding factor on
4 this. The Legisl-- Legislature has spent
5 three years in dealing with this. We have done
6 extensive meetings; we have gone out, we've
7 done surveys of the employees, the people who
8 are going to be the beneficiaries of this plan.
9 They came back and said, the number one
10 thing that they were concerned about was
11 choice. Not cost, choice.
12 The next thing that the Legislature looked
13 at was education. Because we also feel we have
14 a fiduciary responsibility to our -- our
15 citizens out there, our State employees, our
16 county employees, our teachers.
17 We basically want to make certain that
18 we -- they had the educational abilities out
19 there.
20 I think that you'll find out, however,
21 because of the size of the plan that you're
22 dealing with here, what the Legislature found
23 out is the reason we had looked at both -- what
24 we called a -- rather than a bundled or
25 unbundled situation, was a low touch, high
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1 touch situation.
2 We didn't want somebody who -- very
3 sophisticated investor, such as yourself,
4 Governor.
5 GOVERNOR BUSH: Don't --
6 MR. GAY: I'm term limited, so I -- I'm not
7 kissing up here. So --
8 But anyway, basically what we were looking
9 at was somebody who had the sophistication, who
10 didn't have to deal with a high touch provider.
11 If they wanted to deal with Fidelity, Vanguard,
12 somebody like this, that's what we were looking
13 at.
14 We were looking at high recognition names
15 for mutual funds out there so people could
16 actually make those decisions on their own.
17 Now, you know, everybody's talking about
18 institutional investors being the lowest cost.
19 But I'm going to tell you, the other thing
20 that we looked at -- and this was the third
21 thing that the Legislature really put down, was
22 competition, because with the size of this
23 plan, competition is going to drive the costs
24 down. We've already seen that in the
25 marketplace. That's on the record in the
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1 debate out on the House floor.
2 The point is is that what we are continuing
3 to see as that -- as that competition goes
4 forward, you will drive the costs down for
5 those people.
6 However, some of them need additional
7 information. They need somebody to come out
8 and talk with them one-on-one. That was the
9 thing that we realized. That's why we had a
10 low touch to a high touch.
11 We never anticipated having 21 providers in
12 this thing. That discussion was never had.
13 What it was looked at was between six to ten
14 providers. It wasn't talked about
15 institutional investors.
16 Let me tell you, I bet you can go to
17 99.9 percent of the State employees, county
18 employees, and the teachers in this state, and
19 ask them who the institutional investors are at
20 the SBA.
21 And if one of them can tell you that it's,
22 you know, State Street, maybe Black Rock, or
23 even tell you who Black Rock is, I'm going to
24 be very surprised. That's why the Legislature
25 was looking at it to have name recognition out
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1 there for people so they can make those
2 choices.
3 As far as the bundled providers, those are
4 the high touch. And we felt that was
5 necessary, to make certain that people had
6 educational options. This is not going to
7 replace the SBAs and the TPAs, the educational
8 provider there.
9 But because of the size of the plan that
10 you're dealing with, you have to have
11 additional people in there. People who are
12 going to go out to their homes and sit down
13 with them and explain the difference between a
14 bond, a stock, and you -- we all laugh about
15 that. But let me tell you, there are a lot of
16 people in the state who do not know the
17 difference.
18 And if you're going to put this plan out
19 there, you need to have that type of education
20 out there. And, unfortunately, the educational
21 providers that we're looking at, who aren't the
22 bundled providers, do not have near enough
23 people to be able to provide that service to
24 this large a plan.
25 The other thing I just want to talk real
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1 briefly about is we are looking at something
2 here that's kind of historical.
3 I've been asked to come out -- in fact, I
4 go to Austin on Thursday, one of the
5 legislative -- main legislative conference
6 providers in the country has asked me to come
7 out and speak to the Texas Legislature on this
8 very issue, because of the background that we
9 obtained over the last three years.
10 That survey that we did with the State
11 employees, I think it was almost 8,000 people
12 that we went out and touched base with,
13 provided us a clear understanding of where we
14 needed to go with this plan.
15 The DC plan is really not going to impact
16 the DB plan. If anything, it will free up
17 assets because of the way the valuations are --
18 are done, while helping strength them while
19 they get people moving over, especially if --
20 if you average cost that out to the individual.
21 So I -- I really think that there are a lot
22 of issues that were out here. I think you need
23 to have more than one provider on the bundled
24 side. I need you -- I think you need to have
25 name -- name recognition out there for your
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1 people so they understand exactly what they are
2 selecting. And that was the intent of the
3 Legislature.
4 And I think if you -- if we can provide you
5 with the -- the record from the House floor
6 debate to make that certain for everybody.
7 I'll be glad to answer any questions if you
8 have any.
9 GOVERNOR BUSH: Questions?
10 Thank you, Greg.
11 MR. GAY: Thank you, Governor.
12 MR. HERNDON: The next speaker is Tim Rouse
13 from Fidelity.
14 MR. ROUSE: Thank you, Governor, Trustees.
15 I represent -- I work for
16 Fidelity Investment, and we are the largest
17 provider of defined contribution plan services
18 in the country.
19 We represent and service more than
20 5 million Americans. We represent and service
21 more than a million employees in the tax exempt
22 and public service arena.
23 And the proposal that the staff of the SBA
24 has presented to you today is both sound and
25 reasonable.
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1 And in answer to Treasurer Nelson's
2 question --
3 (Commissioner Crawford exited the room.)
4 MR. ROUSE: -- earlier as to what to -- the
5 large corporate providers offer.
6 It is clear from our -- our client base,
7 that the large plans -- and we represent --
8 (Commissioner Gallagher exited the room.)
9 MR. ROUSE: -- we represent eight of the
10 largest twenty plans in the country -- all
11 offer one single record keeper, one single
12 administrator, but multiple investment choices.
13 So this idea that you have to have multiple
14 bundled providers is -- is not true, it's not
15 the wave, it's not the -- the trend. It is
16 exactly the opposite.
17 The trend is exactly the opposite of what
18 you've been told today from the bundled
19 provider services.
20 The proposal that's been made by the SBA
21 Board protects the better interest of the
22 public employees in the state of Florida,
23 because what high touch means really is
24 commissioned sales agents. And that's not
25 necessarily the right environment that you want
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1 to provide for your State employees.
2 You want to have education for your
3 employees; not commissioned sales agents that
4 are trying to persuade them from one plan into
5 another; and oftentimes, selling the same exact
6 funds.
7 That is a problem with -- with these
8 bundled arrangements. They're offering the
9 same funds, different companies, different
10 wrap fees, and -- and participants get
11 confused.
12 And as Tom Herndon pointed out to you
13 earlier, the end result is to stay where they
14 are, and not to do anything, to stay in the DB
15 plan. And that is not always the best -- the
16 best alternative for these employees.
17 So the -- the bundled -- the multiple
18 bundled arrangement that is being proposed
19 really exposes your employees to a heavy
20 marketing environment, and not a -- a sales
21 environment.
22 And, Governor, as you pointed out earlier,
23 why are you duplicating the recordkeeping and
24 the education with the bundled providers? You
25 are paying for a choice, and the participants
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1 are paying for a choice, they're just not
2 exposed to it up front as they should be.
3 And so that's -- we think the proposal that
4 you see before you today by the SBA is the
5 right one, and the one that the -- the Board
6 should consider.
7 Thank you.
8 GOVERNOR BUSH: Thank you.
9 MR. HERNDON: The next speaker is
10 Mary Kay Cariseo, the Florida Association of
11 Counties.
12 MS. CARISEO: Good morning, Governor,
13 Cabinet. It is -- very happy to be here.
14 I did not come over last night, I came over
15 this morning. But I will be staying for lunch
16 and spending some time here.
17 I'd like to talk about this just from a
18 little bit different perspective. The
19 Association of Counties was also very involved
20 in this legislation for the past three years.
21 One of the main reasons that we were involved
22 in this is to -- is for the recruitment and
23 retention of high level managers.
24 This was very, very important to us. As
25 you know, sometimes it's getting very, very
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1 difficult for us to recruit and retain very,
2 very good employees at the County level.
3 And so we thought that this would be a very
4 good tool, because the DB plan was something
5 where you had to have 30 years to be fully
6 vested, there had to be another way to provide
7 an incentive for us to be able to recruit and
8 retain good employees.
9 And so that is why the Association of
10 Counties got involved in this legislation.
11 And we believe that choice is very, very
12 important to our employees.
13 We want to make sure that this Investment
14 Policy Statement has a structure that accounts
15 for all the employees. Yes, it's important to
16 make sure that those employees that choose to
17 go into the defined contribution plan, that
18 don't want to make the decisions on their own
19 investments, that there are some funds out
20 there that will do some of that for them.
21 But there are also many, many other
22 employees, and your younger generation
23 employees, where this is something that they
24 enjoy doing, this is something that they want
25 to take responsibility for themselves to do.
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1 They want to have more choice, they want to
2 be able to make their investments on their own.
3 So in that regard, I will tell you that the
4 Association of Counties is -- is supportive of
5 making sure that we at least look at allowing
6 bundled providers into this framework.
7 The cost is important. There's no question
8 about that. But there's also nothing in the
9 legislation that would prevent the State Board
10 of Administration --
11 (Commissioner Gallagher entered the room.)
12 MS. CARISEO: -- for making sure that we're
13 not overly charging any of our employees.
14 So I would just indulge you to please
15 continue to look at this.
16 I also serve as Chair of the
17 Advisory Committee. And we also encouraged the
18 State Board of Administration to include a
19 bundled provider, at least in their initial
20 phases, going out and looking so that we can
21 have a very good comparison.
22 GOVERNOR BUSH: Would you be happy if there
23 was more than one?
24 MS. CARISEO: If that -- if it came out
25 that that was cost-effective, absolutely.
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1 Any questions?
2 Thank you.
3 GOVERNOR BUSH: Tom, could I ask you a
4 question?
5 MR. HERNDON: Yes, sir.
6 GOVERNOR BUSH: If -- if a State employee
7 or a teacher is looking at two years from now,
8 whatever it is, three years from now -- to
9 two -- two -- two-and-a-half years from now,
10 I guess?
11 MR. HERNDON: July of 2002.
12 GOVERNOR BUSH: -- will be receiving a
13 packet of information with education attached
14 to it, if this -- if this was presented to
15 them, do you think that they would look at this
16 as 21 separate options; or, in essence, they
17 would be looking at seven, twelve, thirteen?
18 I mean, when you say a bundled provider, to
19 say that there's 21 choices, I guess people can
20 pick and choose between a bundled -- one
21 bundled offering and -- and the nonbundled.
22 But aren't -- aren't we really talking
23 about fewer choices than 21?
24 And if you added another bundled provider,
25 it's not nine times more -- or nine more
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1 choices.
2 I mean, in essence, if people are going to
3 opt for this, they're going to opt for the full
4 service nature of it, or a branded product that
5 they may want to have.
6 MR. HERNDON: Governor, I -- I honestly
7 don't know the answer to the question. I
8 understand exactly what you're saying, and --
9 and you may be absolutely right, that they
10 relate to the brand, and they stay within that
11 brand family of products.
12 That may very well --
13 GOVERNOR BUSH: And so no --
14 MR. HERNDON: -- be the case. We just
15 don't know.
16 I mean, I think the evidence from -- and
17 some of the vendors could probably speak to
18 this, is that people tend to migrate toward the
19 brands. That's why they advertise. That's --
20 that's why people relate to that.
21 On the other hand, if you provide an
22 adequate education, and you provide an adequate
23 level of service, we would hope that low cost
24 and service also drives --
25 GOVERNOR BUSH: That's really not my point
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1 though.
2 I mean, I think most -- personal belief is,
3 most people will migrate towards the lower
4 cost, and less -- you know, the more simplified
5 alternatives. That'd be my guess.
6 But -- but I may be -- that's their choice.
7 That's -- that's really their decision.
8 My question is: There is a point where
9 your consultants will tell you that too many
10 choices does confuse, and then we end up,
11 people staying in the defined benefit program.
12 I think that's -- that's the issue here, one of
13 the major issues.
14 And so do -- are we -- do employees, people
15 in the retirement system, are they going to be
16 looking at 21, as you've presented, or -- or,
17 in essence, are they looking at --
18 MR. HERNDON: Thirteen.
19 GOVERNOR BUSH: -- at the 13.
20 MR. HERNDON: Well, to -- to be very
21 honest, Governor, we hope they look at the 21.
22 We very intentionally not tried to specify what
23 those nine choices are within the bundled
24 provider --
25 GOVERNOR BUSH: Right.
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1 MR. HERNDON: -- framework.
2 We've specified them by asset type. In
3 other words, one money market or cash
4 equivalent, you know, four U.S. equities.
5 So -- but beyond that, we've not tried to --
6 to -- to suggest that.
7 And you may very well get some -- some
8 niche marketing that will appeal to people, you
9 may get some duplications of products. We
10 don't know.
11 But we thought that was the best way to let
12 the providers play to their strength, to be
13 honest. And -- and put the products out on the
14 table that they think are most attractive, and
15 for which they have the best track record.
16 I hope it's 21, but I -- I honestly don't
17 know.
18 Speaking of consultants, this is the last
19 speaker, and maybe she can address this
20 question as well.
21 So --
22 GOVERNOR BUSH: Thank you.
23 General, you had something --
24 COMPTROLLER MILLIGAN: No.
25 GOVERNOR BUSH: Okay.
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1 MR. HERNDON: The last speaker is
2 Nancy Williams from Mercer. And Mercer is the
3 general consultant to the Board and -- and
4 under contract.
5 GOVERNOR BUSH: Welcome.
6 MS. WILLIAMS: Thank you.
7 Governor, fellow fiduciaries, it's nice to
8 be here.
9 I'm the public sector practice leader for
10 Mercer. It's a national firm and also
11 international, and we work with defined benefit
12 and defined contribution plans. And we were
13 hired to be the general consultant to the SBA.
14 And we were not hired to endorse their
15 Investment Policy Statement. Quite the
16 contrary, we were hired to challenge them,
17 bring to bear the best practices we've seen
18 across the country. And we have made plenty of
19 recommendations in earlier versions of the
20 policy.
21 But I'm here today to give you our unbiased
22 information and experience, and our opinion on
23 the policy as it stands today.
24 As other speakers have said, this is a
25 monumental time for not only the public
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1 employees of Florida, but really for the whole
2 country, because the eyes are upon you.
3 I know my clients in Ohio and in Colorado,
4 and in several other states, tune in to the --
5 the meetings, and they -- they go on your
6 website, and they -- they read what's going on
7 with this -- this big defined contribution
8 plan.
9 So you have the opportunity to create a
10 model, or you have the opportunity to become
11 the example of what not to do.
12 A lot of fiduciary hats.
13 GOVERNOR BUSH: Thanks for sharing that.
14 MS. WILLIAMS: Well, you will be referred
15 to one way or the other, I'm sure.
16 But we put on our fiduciary hats when we
17 looked at this Investment Policy Statement
18 because we knew ultimately we would be talking
19 to you, the fiduciaries, of the defined benefit
20 and the defined contribution trusts.
21 (Commissioner Crawford entered the room.)
22 MS. WILLIAMS: Basically we found the
23 policy to be very straightforward. It had a
24 nice array of options that were clearly
25 distinguishable by investment return and risk.
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1 And one of the things we predict that your
2 employees will really love are those lifestyle
3 funds, where they are simply and clearly
4 labeled conservative, moderate, and aggressive.
5 A lot of people will relate to those
6 lifestyle funds, the names, and they'll take
7 great comfort in -- in seeking out those as an
8 opportunity to -- to the defined benefit plan.
9 The other highlight of your legislation was
10 certainly the independence and -- and how you
11 tried to avoid conflicts of interest on giving
12 information on the defined benefits, defined
13 contribution choice. That's -- I mean, that's
14 by far the most important brave thing you've
15 done, and we have touted that around the
16 country, that you are -- at least that far,
17 you're a model to follow.
18 There is one portion of the plan that we --
19 we don't -- of the Policy Statement that we
20 don't agree with in its current form, and that
21 has to do with the bundled and unbundled.
22 We -- we are not people who dislike bundled
23 options. We recommend them to many clients,
24 many small clients. You're, I think,
25 everybody's biggest client. With 650,000
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1 people, you don't need to go with a bundled
2 approach.
3 They certainly served their purpose, as
4 earlier speakers have said, in the past
5 decades. These were wonderful ways for State
6 administrators to get up and running on their
7 deferred compensation plan. And there are
8 times still today where we would recommend
9 bundled options, but not for this plan, not --
10 not for a basic retirement plan of this size.
11 Basically we think the unbundled approach
12 will give you the best flexibility in
13 addressing problems in the future. And after
14 all, you do want the best in class for your
15 education, communications, your recordkeeping,
16 and your money management.
17 And in an unbundled approach, you can make
18 changes that are seamless to the members, and
19 keep it at the high quality level that it -- it
20 needs to be.
21 You'll avoid duplication of costs, you'll
22 avoid some of the transition costs that Tom
23 referred to a little earlier. But probably
24 most importantly is you really are going to be
25 giving people unbiased information, a
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1 consistent approach, and we believe it will be
2 most helpful for the members.
3 Now as I stated to the Advisory Committee,
4 I've never had a client yet out of the
5 35 pension funds that I've worked for that have
6 said they didn't want more choice.
7 The statistics will show that they -- they
8 will log on to the kind of options that you
9 have arranged in the Investment Policy
10 Statement. Now, we think that those lifestyle
11 funds will be extremely popular, because people
12 will relate to those terms.
13 We would urge you to approach this in the
14 best interest of the members, remembering that
15 you are fiduciaries, and do what's best for
16 the -- in the financial interest of those
17 members, and that would be the institutional
18 approach; the unbundled approach; and the
19 low cost, high performing funds.
20 And I'll be happy to answer any questions
21 you have.
22 TREASURER NELSON: Governor, I have some.
23 GOVERNOR BUSH: Yeah. Please.
24 TREASURER NELSON: Thank you, Governor.
25 On the basis of what you just said, what is
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1 not exercising our fiduciary interest in the
2 interest of the members of the plan that would
3 be going along with the staff recommendation?
4 Your recommendation is the staff original
5 recommendation which --
6 MS. WILLIAMS: That's correct.
7 TREASURER NELSON: -- was unbundled. The
8 staff amended that, and came back with the
9 original recommendation plus one bundled
10 provider.
11 And on the basis of what you just said,
12 you're telling us that that is not in the
13 interest of the plan members.
14 And would you relate that -- your comments
15 specifically to the fiduciary duty of
16 the Board?
17 MS. WILLIAMS: Yeah, I'll be happy to.
18 I think there are two main costs -- or two
19 main points: Costs and performance. When you
20 have a bundled provider, you may not be having
21 the best communicator, record keeper, and money
22 manager all rolled into one. And one of those
23 three elements might be lacking, and it's very
24 hard to change anything if you're with a
25 bundled provider. So it would be performance.
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1 The second would be cost. We -- we do
2 believe that the costs will be higher, not just
3 the transition costs, but the ongoing costs
4 will be higher.
5 There also, it's hard to identify the
6 costs. As Trustees, you will have a difficult
7 time trying to figure out how much of the money
8 was spent for money management versus
9 education.
10 I have to tell you, we've been very
11 unsuccessful as a firm in trying to get those
12 cost figures out of bundled providers for many
13 years.
14 TREASURER NELSON: The alternative to
15 your -- to your answer is, there is choice.
16 And that was part of the recommendation of the
17 staff.
18 That's the alternative, you would -- you
19 agree with that?
20 MS. WILLIAMS: I'm sorry, I don't quite
21 understand the question.
22 TREASURER NELSON: All right. You said
23 that on the basis of cost, efficiency, and
24 so forth, what you just said, they added one
25 bundled plan, and under the recommendation,
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1 that that gives additional choice to the
2 consumer.
3 MS. WILLIAMS: I think if the costs are
4 made clear to the consumer, then I wouldn't
5 have the fiduciary concerns. I'm doubtful that
6 the costs were --
7 GOVERNOR BUSH: -- won't they? Won't
8 you -- I mean, won't the costs be identified?
9 COMMISSIONER GALLAGHER: Nobody knows what
10 it is.
11 GOVERNOR BUSH: But they will when they
12 bid.
13 MS. WILLIAMS: I hope so.
14 GOVERNOR BUSH: You're -- aren't you the
15 consultant to --
16 MS. WILLIAMS: Yes.
17 GOVERNOR BUSH: -- organize the --
18 MS. WILLIAMS: Yes.
19 And we've never seen the costs clearly
20 identified. I'm not very optimistic that they
21 will be clearly identified, how much is spent
22 for money management versus education versus
23 marketing costs and things like that.
24 I hope they will. I hope they'll come in
25 right.
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1 GOVERNOR BUSH: Thank you.
2 MS. WILLIAMS: Thank you.
3 MR. HERNDON: That's all the speakers,
4 Governor, members.
5 COMPTROLLER MILLIGAN: Fish or cut bait.
6 MR. HERNDON: I don't have a whole lot more
7 to add. All of our information, and so forth,
8 has been provided to you I believe in as much
9 detail as we can provide.
10 We're comfortable with the staff
11 recommendation. We -- we would like to request
12 and recommend we do need some direction in
13 order to move forward.
14 And General Milligan said I guess it's now
15 time for you to go ahead and decide.
16 COMPTROLLER MILLIGAN: If I may, Governor,
17 while I don't endorse 100 percent what I see in
18 this statement, for example, some of the
19 definitions, and -- and some of the areas that
20 perhaps need to be clarified, I think there's
21 enough merit as a result of two advisory
22 councils making their recommendations; the SBA
23 listening to the industry, trying to understand
24 all of the aspects of this; and the fact that
25 we are going to move forward and really trying
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September 26, 2000
1 to determine some of these costs that we don't
2 have a good handle on right now, and -- and
3 really what in terms of costs to our -- the
4 members of the -- of the FRS, what -- what are
5 the real costs.
6 And we'll find that out over the next
7 probably six months or so I think is probably a
8 fair estimate. And so while I -- I'm not
9 endorsing fully this statement, I am willing to
10 move it as was suggested as the -- give initial
11 approval of the statement as a draft to be used
12 in the rulemaking, and guidance for the
13 rulemaking.
14 And -- and so I would make that motion.
15 TREASURER NELSON: And I will second the
16 motion.
17 In light of the testimony here today, and
18 in light of the testimony with regard to our
19 financial responsibility, our fiduciary
20 responsibility, to act in the interest -- and
21 the sole interest of the plan participants,
22 which are our employees and our retirees, it
23 seems to me that the staff has recommended that
24 the appropriate due diligence, which includes,
25 as you said, Bob, the professional advisors,
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September 26, 2000
1 the advisory committees, and other experts, and
2 they have come up with this staff
3 recommendation.
4 This recommendation has also recognized the
5 choice issue by including one bundled provider.
6 But it also considers the issue of cost, which
7 has been raised here.
8 And it -- I heard the testimony also that
9 it considers the experience of other 401(k)
10 plans in the country, which generally offer no
11 more than one bundled provider.
12 With regard to our fiduciary
13 responsibility, I believe that this due
14 diligence meets the prudent expert rule, and
15 I'm comfortable with that, thus I second the
16 motion.
17 GOVERNOR BUSH: There's a motion and a
18 second.
19 Any more discussion?
20 I would just like to say for the record
21 that I would hope that everybody would keep an
22 open mind and let the market work. Let's see
23 what -- what comes out of this bid process.
24 It's amazing when you create a competitive
25 marketplace, typically the consumers, the
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September 26, 2000
1 people that -- a majority of whom, by the way,
2 represented here today were supportive of more
3 choices.
4 And I guess we can write that off to say,
5 that's what everybody wants. But I think we
6 need to be respectful of the fact that
7 Mr. Cerra, representing a majority or close to
8 a majority of the people, the retirees and the
9 teachers, are -- are supportive of more
10 choices. I heard the national -- the -- the
11 County organization speak similarly.
12 My conversations with other representatives
13 representing groups inside the Florida
14 Retirement System, they do want more choices.
15 Now, how that plays out, I think we ought
16 to let it play out in the -- in the
17 marketplace, and let them come up with the best
18 ideas, and then we'll -- when will we be back
19 gathered?
20 MR. HERNDON: You'll be back in November
21 for another snapshot of this. That'll be after
22 the public hearing, and we'll have some
23 additional information for you.
24 And then ultimately you'll be back in --
25 back in December to adopt this as a rule
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September 26, 2000
1 officially. We will go through the selection
2 process throughout the course of the next year.
3 And let me just --
4 GOVERNOR BUSH: So after the rulemaking
5 process, then the RFP will --
6 MR. HERNDON: Well, we'll have an RFP out
7 for a third party administrator we hope within
8 the next couple of weeks, we'll develop the
9 selection criteria for the investment managers
10 within the next 90 days, and be bringing that
11 to you.
12 But let me just add, and this may provide
13 some comfort, Governor, too. Just like for the
14 total fund investment plan on the DB side of
15 things, you always have the latitude to amend
16 the Investment Policy Statement to implement
17 the program as you best see fit.
18 So even though we will solicit bids with
19 the intention of awarding one bundled provider,
20 if you do, in fact, get many bundled providers
21 who offer good, competitive, low cost, high
22 service, you have that discretion at any time.
23 So --
24 GOVERNOR BUSH: Any other comments?
25 There's a motion and a second.
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September 26, 2000
1 Without objection, it's approved.
2 Tom, thank you for your hard work. Thanks
3 to the SBA --
4 MR. HERNDON: Thank you.
5 GOVERNOR BUSH: -- staff.
6 Thank you all for coming. And I'm sure
7 you'll keep coming to these meetings.
8 MR. HERNDON: I have two more items on the
9 agenda, Governor.
10 GOVERNOR BUSH: Oh, yeah.
11 MR. HERNDON: Item Number 5 is the fund
12 activity analysis report for the month of
13 July 2000.
14 COMPTROLLER MILLIGAN: Accept that for
15 information.
16 GOVERNOR BUSH: There's a motion. Is there
17 a --
18 Do we need a second, or just -- just for
19 information purposes?
20 COMPTROLLER MILLIGAN: Just for
21 information, I think, Governor.
22 GOVERNOR BUSH: Okay.
23 MR. HERNDON: And Item Number 6 is the
24 Florida Water Pollution Control Financing
25 Corporation awarding of bids. And we would
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1 recommend that that be deferred till the
2 October 10th meeting of the Board.
3 COMPTROLLER MILLIGAN: Move deferral.
4 TREASURER NELSON: Second.
5 GOVERNOR BUSH: Motion to defer, and a
6 second.
7 Without objection, it's approved.
8 MR. HERNDON: That concludes the agenda.
9 Thank you very much.
10 GOVERNOR BUSH: Thank you very much.
11 COMMISSIONER GALLAGHER: Hmm, had a lot of
12 people here.
13 GOVERNOR BUSH: Yes, we did.
14 Big deal.
15 (The State Board of Administration Agenda
16 was concluded.)
17 * * *
18
19
20
21
22
23
24
25
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DIVISION OF BOND FINANCE 91
September 26, 2000
1 GOVERNOR BUSH: Division of Bond Finance.
2 COMMISSIONER GALLAGHER: Motion on the
3 minutes of July 25th.
4 GOVERNOR BUSH: Ben, do you want to briefly
5 describe what you do?
6 (Treasurer Nelson exited the room.)
7 MR. WATKINS: Basically what we do,
8 Governor, is to oversee the issuance of debt by
9 the State for various programs, including road
10 construction and the acquisition of
11 environmentally sensitive land, and schools
12 primarily.
13 In this -- this -- the Governor and Cabinet
14 serve as my Board of Directors to authorize the
15 issuance of all of the debt that the
16 Legislature authorizes during session for those
17 various projects.
18 GOVERNOR BUSH: How much debt have we
19 issued in our great state?
20 MR. WATKINS: We have approximately
21 16.9 billion dollars of debt --
22 GOVERNOR BUSH: Do we?
23 MR. WATKINS: -- outstanding. Billion with
24 a b.
25 GOVERNOR BUSH: No one's --
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DIVISION OF BOND FINANCE 92
September 26, 2000
1 MR. WATKINS: That's --
2 GOVERNOR BUSH: -- shuddering in
3 Bay County.
4 I shudder every time I hear these numbers.
5 I just thought maybe people in Bay County might
6 be a little nervous about it, too.
7 But --
8 GOVERNOR BUSH: Onward.
9 COMMISSIONER GALLAGHER: Motion on the
10 minutes.
11 GOVERNOR BUSH: Is there a second?
12 COMMISSIONER CRAWFORD: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 Item 2.
16 MR. WATKINS: Item 2 is a resolution
17 authorizing the competitive sale of up to
18 100 million dollars in State general obligation
19 funds for right-of-way acquisition and bridge
20 construction.
21 COMMISSIONER GALLAGHER: Motion to approve.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without objection, it's approved.
25 MR. WATKINS: Item Number 3 is a report of
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DIVISION OF BOND FINANCE 93
September 26, 2000
1 award on the competitive sale of
2 150 million dollars in lottery revenue bonds
3 issued for school construction. The sale of
4 the bonds was awarded to the low bidder at a
5 true interest cost of 5.3089 percent.
6 COMMISSIONER GALLAGHER: Motion to approve.
7 COMPTROLLER MILLIGAN: Second.
8 GOVERNOR BUSH: Moved and seconded.
9 Without objection, it's approved.
10 MR. WATKINS: Item Number 4 is a report of
11 award on the competitive sale of
12 200 million dollars in public education capital
13 outlay bonds for school construction. The sale
14 of the bonds was awarded to the low bidder at a
15 true interest cost rate of 5.4318 percent.
16 COMMISSIONER GALLAGHER: Motion to approve.
17 COMMISSIONER CRAWFORD: Second.
18 GOVERNOR BUSH: Moved and seconded.
19 Without objection, it's approved.
20 MR. WATKINS: Item Number 5 is a report of
21 award on the competitive sale of 24.4 million
22 dollars, the Board of -- Board of Regents
23 Housing Revenue Bonds for construction of a
24 dormitory at Florida Atlantic University. The
25 bonds were -- the sale of the bonds was awarded
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DIVISION OF BOND FINANCE 94
September 26, 2000
1 to the low bidder at a true interest cost rate
2 of 5.3756 percent.
3 COMMISSIONER GALLAGHER: Motion to approve.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. WATKINS: Thank you.
8 COMPTROLLER MILLIGAN: You know, the
9 great -- great interest --
10 GOVERNOR BUSH: -- dollars and --
11 COMMISSIONER GALLAGHER: Sixteen point --
12 GOVERNOR BUSH: -- 46 cents.
13 COMPTROLLER MILLIGAN: Interest rates
14 though I -- I think are phenomenal, how they're
15 staying -- how you're still getting the
16 interest rate.
17 MR. WATKINS: If you're going to be
18 borrowing money, it's a good -- it's a good
19 interest rate environment to be borrowing in.
20 GOVERNOR BUSH: Apparently we are.
21 COMMISSIONER GALLAGHER: We always are.
22 (The Division of Bond Finance Agenda was
23 concluded.)
24 * * *
25
ACCURATE STENOTYPE REPORTERS, INC.
95
September 26, 2000
1 CERTIFICATE OF REPORTER
2
3
4
5 STATE OF FLORIDA:
6 COUNTY OF LEON:
7 I, LAURIE L. GILBERT, do hereby certify that
8 the foregoing proceedings were taken before me at the
9 time and place therein designated; that my shorthand
10 notes were thereafter translated; and the foregoing
11 pages numbered 1 through 94 are a true and correct
12 record of the aforesaid proceedings.
13 I FURTHER CERTIFY that I am not a relative,
14 employee, attorney or counsel of any of the parties,
15 nor relative or employee of such attorney or counsel,
16 or financially interested in the foregoing action.
17 DATED THIS 9TH day of OCTOBER, 2000.
18
19
20
21 LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
22 Tallahassee, Florida 32301
850/878-2221
23
24
25
ACCURATE STENOTYPE REPORTERS, INC.
T H E C A B I N E T
S T A T E O F F L O R I D A
Representing:
STATE BOARD OF ADMINISTRATION
DIVISION OF BOND FINANCE
DEPARTMENT OF VETERANS' AFFAIRS
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES
DEPARTMENT OF REVENUE
STATE BOARD OF EDUCATION
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT TRUST FUND
VOLUME II
The above agencies came to be heard before
THE FLORIDA CABINET, Honorable Governor Bush
presiding, in City Hall, City Commission Chambers,
9 Harrison Avenue, Panama City, Florida, on Tuesday,
September 26, 2000, commencing at approximately
9:03 a.m. Central Daylight Savings Time.
Reported by:
LAURIE L. GILBERT
Registered Professional Reporter
Certified Court Reporter
Certified Realtime Reporter
Registered Merit Reporter
Notary Public in and for
the State of Florida at Large
ACCURATE STENOTYPE REPORTERS, INC.
100 SALEM COURT
TALLAHASSEE, FLORIDA 32301
850/878-2221
97
APPEARANCES:
Representing the Florida Cabinet:
JEB BUSH
Governor
BOB CRAWFORD
Commissioner of Agriculture
BOB MILLIGAN
Comptroller
KATHERINE HARRIS
Secretary of State
BOB BUTTERWORTH
Attorney General
BILL NELSON
Treasurer
TOM GALLAGHER
Commissioner of Education
* * *
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98
September 26, 2000
I N D E X
ITEM ACTION PAGE
DEPARTMENT OF VETERANS' AFFAIRS:
(Presented by Robin Higgins,
Executive Director)
1 Approved 100
2 Approved 104
3 For Information Only 104
4 Approved 130
DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES:
(Presented by Fred O. Dickinson, III,
Executive Director)
1 Approved 133
2 Approved 133
3 Approved 134
4 Approved 135
5 Approved 135
6 Approved 139
DEPARTMENT OF REVENUE:
(Presented by James A. Zingale, Ph.D.,
Executive Director)
1 Approved 141
2 Approved 155
3 Approved 155
4 Approved 156
STATE BOARD OF EDUCATION:
(Presented by Wayne V. Pierson,
Deputy Commissioner)
1 Approved 190
2 For Information Only 191
3 Approved 201
4 Approved 201
ACCURATE STENOTYPE REPORTERS, INC.
99
September 26, 2000
I N D E X
(Continued)
ITEM ACTION PAGE
BOARD OF TRUSTEES OF THE
INTERNAL IMPROVEMENT
TRUST FUND:
(Presented by Kirby B. Green, III,
Deputy Secretary)
1 Approved 202
2 Deferred 202
Substitute 3 Deferred 203
4 Deferred 203
Substitute 5 Approved 203
6 Approved 210
Substitute 7 Deferred 210
8 Deferred 255
CERTIFICATE OF REPORTER 256
* * *
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF VETERANS' AFFAIRS 100
September 26, 2000
1 P R O C E E D I N G S
2 GOVERNOR BUSH: Department of
3 Veterans' Affairs.
4 Colonel Higgins, how are you?
5 MS. HIGGINS: I'm doing well, Governor.
6 COMMISSIONER GALLAGHER: Motion on the
7 minutes, July 25th.
8 COMMISSIONER CRAWFORD: Second.
9 GOVERNOR BUSH: Moved and seconded.
10 Without objection, it's approved.
11 Item 2.
12 Before you do that, you may want to just
13 briefly describe what the -- what you do,
14 because you do very good at it.
15 MS. HIGGINS: Well, thank you. I -- we
16 work very hard at it.
17 We are a small State agency that is
18 actually headed by the Governor and the
19 Cabinet. And that's why they call me an
20 Executive Director. I just run the department
21 day-to-day for the Governor and the Cabinet.
22 I'm not quite sure why that is, but it --
23 it is.
24 And it works out very nicely, because it
25 gives me an opportunity that some of the other
ACCURATE STENOTYPE REPORTERS, INC.
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September 26, 2000
1 agency heads don't have, to come to the Cabinet
2 meeting -- meetings, and -- and deal with you.
3 And our job is basically and simply to
4 provide veterans advocacy for the 1.7 million
5 veterans in the state of Florida, many of
6 whom -- most of whom, in fact, are over the age
7 of sixty-five.
8 So in addition to providing counseling and
9 assistance in veterans receiving their
10 U.S. Department of Veterans' Affairs, their
11 Federal benefits, which most of the veterans
12 benefits are, we have about one-third of my
13 staff is dedicated to that facilitation of --
14 of veterans receiving their Federal benefits.
15 Another huge part of my department is
16 dedicated towards veterans nursing homes. And,
17 in fact, that's one of my agenda items today,
18 because, of course, as everyone else in the
19 audience here knows, we will be building, I
20 hope, soon a veterans nursing home here in --
21 in Bay County, as well as in Charlotte County.
22 So --
23 GOVERNOR BUSH: Could I ask one -- just --
24 if -- if it's inappropriate, you don't want to
25 talk about it, you can.
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September 26, 2000
1 But what -- last week there was some news
2 on -- on a private matter that I thought might
3 be appropriate to bring up as well.
4 If it's -- unless it's inappropriate.
5 MS. HIGGINS: No, sir.
6 It's -- next to serving the veterans of the
7 state of Florida, it's really one of my
8 favorite issues, and certainly one that I spend
9 a lot of time doing.
10 As -- as you all know, of course, my
11 husband, who was on military active duty, had
12 served for 22 years -- in fact, had served with
13 General Milligan in the Marine Corps -- was
14 taken prisoner by terrorists in Lebanon, and
15 over the course of the next several years was
16 murdered by those terrorists.
17 And, in fact, it took four-and-a-half years
18 before we were able to get his remains home
19 from Lebanon to bury in National Cemetery.
20 Over the years, certainly -- you know, I
21 never forget Rich a day, and I know
22 General Milligan and several others who know
23 him, also don't.
24 But I've really tried to turn it into
25 something good, and something that's important
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DEPARTMENT OF VETERANS' AFFAIRS 103
September 26, 2000
1 for the people of this country, and certainly
2 for the military people of this country.
3 And one of the things that I've been
4 fighting very hard for is for better -- better
5 laws in this country that would send a message
6 to those that would commit terrorism,
7 especially against our military personnel, that
8 they're not going to get away with it.
9 And one of the things that we have been
10 able to do, based upon a 1996 anti-terrorism
11 law, is now American citizens who have been
12 harmed by international terrorism, by State
13 sponsored terrorism --
14 (Treasurer Nelson entered the room.)
15 MS. HIGGINS: -- can sue those countries in
16 Federal Court for the damages that they have
17 inflicted.
18 I've done that. I brought suit on behalf
19 of the estate of my husband, and my
20 stepdaughter, for State sponsored terrorism
21 against the government of Iran.
22 And Thursday a Federal judge found that the
23 government of Iran is responsible, and is
24 liable, in fact, to pay me -- pay me a
25 judgment. Now, of course, I've got to try to
ACCURATE STENOTYPE REPORTERS, INC.
DEPARTMENT OF VETERANS' AFFAIRS 104
September 26, 2000
1 collect that.
2 So I think, you know, the important thing
3 for me and my family -- and I think for all
4 military personnel who could be harmed in
5 terrorist acts, is that for the first time,
6 Colonel Higgins' case was heard in court, and
7 someone agreed that something horrible
8 happened.
9 And -- and that's enough for me, even if I
10 don't see a penny.
11 GOVERNOR BUSH: Thank you, Robin.
12 MS. HIGGINS: Thanks.
13 Our -- my second issue here is the approval
14 of our quarterly report for the fourth quarter
15 of 1999-2000.
16 COMMISSIONER GALLAGHER: Motion on the
17 quarterly report.
18 COMPTROLLER MILLIGAN: Second.
19 COMMISSIONER CRAWFORD: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Without objection, it's approved.
22 MS. HIGGINS: And my third issue here is
23 that I'd like to give a brief update on the
24 status of our nursing home that we will be
25 building here in -- in Bay County, I hope, and
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September 26, 2000
1 Charlotte County.
2 What I brought with me are two posters --
3 two very small posters. I'll hold them up, and
4 then pass them around for you, about our new --
5 newest nursing home, which is very near
6 completion in Broward County.
7 And it'll show you the -- the floor plan of
8 that nursing home, which will probably be of
9 only -- of interest only to architects and
10 other people --
11 GOVERNOR BUSH: General Butterworth wants
12 to know which one of those rooms is for
13 General Milligan.
14 COMPTROLLER MILLIGAN: And my question is:
15 I hope you get it built quick.
16 MS. HIGGINS: It's going to be -- it's
17 going to be right next to mine,
18 General Milligan.
19 And I -- by the -- but this is
20 Broward County. Ours is going to be here in
21 Bay County --
22 COMPTROLLER MILLIGAN: Sure.
23 MS. HIGGINS: -- I'm sure. I'm sure.
24 This is the --
25 COMMISSIONER GALLAGHER:
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1 General Butterworth will be in that Broward
2 one.
3 MS. HIGGINS: This is the outside of the
4 home.
5 And I'll pass those around, and then I'll
6 leave them here in case the media or someone
7 else would like to look at them.
8 I also brought a -- a time line, which is
9 also rather confusing to -- to you. And I'll
10 just point out some of the important parts.
11 First of all, it changes. It changes
12 weekly because of different things that go on
13 in the state; and more importantly, things that
14 go on in the Federal government.
15 But this is -- and you will each have a
16 copy of this in your -- in your packets -- or
17 at least you should. And if you don't, I'll
18 provide you one.
19 As you know, last year, we received from
20 the Legislature, thanks to much of your
21 support, and thanks also to the -- to the
22 support of Representative Gay,
23 Representative Miller, and certainly
24 Representative Bense, who are all here, I'm
25 told, this morning.
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1 Last year we received that first half of
2 the State's funding, which was 2 million
3 dollars per home. This year, I hope, and I
4 will brief you later on on my budget requests,
5 I am requesting the second half of the State
6 funding.
7 Once we receive the second half of the
8 State funding, we will -- that will then
9 trigger the Federal government to release their
10 part, which actually is two-thirds of the
11 construction costs of this home. This home,
12 when completed, should cost, and should bring
13 in to the community, of course, in construction
14 costs, about 11 to 12 million dollars is
15 what -- what one of these homes costs.
16 The second half of the State funding, we
17 hope, depending on the fact that we're going to
18 get the second half -- I mean, the second half
19 of the State funding will trigger the Federal
20 funding. And we hope that the Federal funding
21 will be triggered to let -- be let loose to us
22 about the second half of the year 2001.
23 There is a little bit -- bit of concern on
24 that right now, because of the Millennium
25 Healthcare Act. If not enough money is put
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1 into the VA's construction budget this year,
2 they will not have enough money to fund a
3 grandfathered list from the previous year. And
4 if that happens, then we won't be able to get
5 our Federal funding until a year away.
6 So we're working very hard with our Florida
7 delegation. They've all been extremely
8 supportive in trying to make sure that we,
9 in fact, get full funding for the
10 U.S. Department of Veterans' Affairs
11 construction budget.
12 But if that happens, of course, we are
13 hoping then that we will receive our Federal
14 funding in the second half of 2001, and
15 groundbreaking will occur the next week after
16 we get our -- our Federal funding.
17 These homes take about -- a little over a
18 year to build. And so we anticipate, if the
19 groundbreaking occurs during the second half of
20 2001, the construction will be complete about
21 the end of 2002, with training and
22 certification required.
23 The bottom line of this chart and the chart
24 you have in your -- in your handout, and what
25 I think most people here are interested in is,
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1 the bottom line is that we hope to have a
2 dedication ceremony and admit our first
3 resident to this home in the first half of the
4 year 2003. The very beginning, maybe January
5 or February.
6 COMMISSIONER GALLAGHER: Could -- could I
7 ask a question?
8 GOVERNOR BUSH: Yes, please.
9 COMMISSIONER GALLAGHER: Do you have in
10 your department, figures on what it costs per
11 person in the nursing homes that we have
12 established in Florida?
13 MS. HIGGINS: For the State -- the
14 State's --
15 COMMISSIONER GALLAGHER: Well --
16 MS. HIGGINS: -- share or how much --
17 COMMISSIONER GALLAGHER: No, no. Total --
18 MS. HIGGINS: -- a person pays?
19 COMMISSIONER GALLAGHER: -- amount -- total
20 amount per person in costs.
21 MS. HIGGINS: We probably have that figure,
22 or could get that figure. I don't know what it
23 is. But I can find out for you.
24 COMMISSIONER GALLAGHER: The reason I ask
25 is that, you know, we're facing a lot of
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1 nursing home crisis --
2 MS. HIGGINS: We are.
3 COMMISSIONER GALLAGHER: -- in this state.
4 And I feel that part of it is -- is how much is
5 being reimbursed, that people get that --
6 you know, having to be getting paid by --
7 through Medicare.
8 And I was just wondering what the
9 difference is in the costs that the Department
10 of Veterans' Affairs looks at for their
11 patients in that -- in those --
12 MS. HIGGINS: Well, out --
13 COMMISSIONER GALLAGHER: -- as opposed to
14 what would be paid for otherwise.
15 MS. HIGGINS: Our cost, of course, is a --
16 is a little bit lower. And that's one of the
17 many beauties of these nursing homes, the State
18 veterans nursing homes, is that our cost is
19 reduced because every veteran who's in that
20 home receives I think it's about $51 per day
21 per diem from the U.S. Department of
22 Veterans' Affairs.
23 Which right now they don't rec-- a veteran
24 who receives that in a State veterans nursing
25 home at this time is not eligible to receive
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1 that in any other community home.
2 GOVERNOR BUSH: I think, Tom --
3 COMMISSIONER GALLAGHER: But --
4 GOVERNOR BUSH: -- the -- the question --
5 COMMISSIONER GALLAGHER: -- but the
6 total --
7 GOVERNOR BUSH: -- on --
8 COMMISSIONER GALLAGHER: -- costs --
9 GOVERNOR BUSH: -- reimbursement is the
10 reimbursement for veterans nursing homes is
11 higher than the Medicaid nursing home --
12 COMMISSIONER GALLAGHER: Right.
13 GOVERNOR BUSH: -- or even perhaps the
14 private marketplace by a little bit. Because
15 we have a different match arrangement with --
16 with Washington.
17 The costs to operate the nursing homes is a
18 little less, but for a unique reason, and that
19 is that because it's owned by the State --
20 COMMISSIONER GALLAGHER: And they get --
21 GOVERNOR BUSH: -- they have sovereign
22 immunity. And so the extraordinary, sad
23 litigation costs that right now are -- are the
24 major reason -- not the only reason -- that
25 these nursing homes are strained does not exist
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1 in the case of the veterans nursing homes.
2 COMMISSIONER GALLAGHER: Well, I -- I -- I,
3 of course, heard that argument and don't
4 disagree with it necessarily.
5 But I would be interested in: One, what a
6 private company gets reimbursed for a Medicare
7 patient; and all-inclusive, what is paid for
8 for a veteran that the Federal government
9 obviously is doing both programs.
10 They -- both people that are there,
11 you know, probably require the same amount of
12 services in most cases. And it would be
13 interesting to see what the difference is in
14 actual, you know, funding.
15 And I -- and I know some veterans end up in
16 other than veterans nursing homes, because
17 there's not enough space for the veterans that
18 we have in Florida. And maybe look at that --
19 MS. HIGGINS: Well, that's not -- that's
20 not -- I would not say that that's a reason.
21 Of course, I would hope that eventually we
22 would have a -- 100 percent people in the
23 nursing homes that we would even have a waiting
24 list of the homes, and we haven't achieved that
25 for various reasons right now.
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1 Although in -- in our -- like in our
2 Daytona home, our percentage occupancy rate is
3 equal or greater than the -- in -- in many of
4 the -- the community homes.
5 (Governor Bush exited the room.)
6 MS. HIGGINS: So I wouldn't say that that's
7 the number one reason that veterans are -- are
8 going to other nursing homes right now.
9 We would hope that eventually, certainly in
10 Bay County, and when we build these
11 nursing homes, veterans will choose that, that
12 this is their -- as their number one option.
13 I found out another fig-- another figure
14 which might be interesting to you, and it's one
15 that I intend to use certainly when I'm asked
16 the question in the Legislature that I've
17 asked -- been asked before, is why are we
18 building these things, why are we not helping
19 our elderly, needy veterans to age in place,
20 which is certainly the right thing to do.
21 And I would agree, and certainly I've sent
22 letters to the -- to the U.S. Department of
23 Veterans' Affairs, and continue to work with
24 them when I -- with Congress when I can, to say
25 that we need more options for veterans in
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1 communities who -- veterans who want to stay at
2 home.
3 We should not necessarily be building
4 nursing home after nursing home after
5 nursing home, just because it says Veterans'
6 Administration, or VA on the top of it.
7 However, in the state of Florida, I -- I
8 can kind of go the other way a little bit,
9 because I'm told by the Agency for Health Care
10 Administration that they -- they maintain a
11 figure of -- of the number of nursing home beds
12 in the general population for those --
13 Floridians over the age of sixty-five.
14 And they have said that there are
15 29.2 nursing home beds in the community for the
16 general population of Florida over -- for every
17 thousand persons over the age of sixty-five in
18 the general population.
19 Even when we build these next two nursing
20 homes, the one in Bay and Charlotte County, we
21 will have 600 beds -- veterans nursing home
22 beds in the state, which equates to less than
23 one bed per veteran over the age of -- per
24 1,000 veterans over the age of sixty-five.
25 So there will always be a need for nursing
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1 homes, I think. And I don't think that we are
2 coming anywhere near having too many State
3 veterans nursing homes as an option for our
4 veterans.
5 And, of course, the veterans, many of whom
6 are here today, like these nursing homes, need
7 these nursing homes. And -- and so I think
8 they're good for -- good for everyone.
9 There is right now, in fact, as part of
10 this -- part of this time line, an ad--
11 advertisement right now from the Department of
12 Management Services for the architect, the
13 architectural engineering firm for this nursing
14 home. And it is due on October 3rd.
15 So perhaps there will be some firms here
16 in -- in the community that will want to bid on
17 this as well.
18 So I'm pretty excited about this.
19 Any questions about the -- the nursing
20 home?
21 I'll probably talk a little bit more about
22 them later on when I talk about my budget.
23 What I wanted to do now is -- is -- just
24 for a few minutes, turn this over to another
25 speaker from here.
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1 Julie Catellier is the Director of the
2 VA Gulf Coast Veterans Health Care System in
3 Biloxi, Mississippi. And -- and, of course,
4 the first question people ask me is that we're
5 in Florida, not in Mississippi. Why are we
6 getting a speaker from Mississippi?
7 Well, I found out when I first came to this
8 job that the VA, the U.S. Department of
9 Veterans' Affairs, in its infinite wisdom, when
10 it established these healthcare networks in the
11 United States, provided -- they call them
12 VISNs, Veterans Integrated Healthca-- Service
13 Network.
14 When they created them, they didn't put the
15 state of Florida in one whole healthcare
16 network. Most of the state of Florida is -- is
17 directed out of St. Petersburg healthcare
18 network. And it has most of the state of
19 Florida, in fact, part of Puerto Rico.
20 The panhandle is in another VISN, another
21 network altogether. And that is out of
22 Jackson, Mississippi.
23 And, in fact, the -- the clinics here in
24 the panhandle are run out of the Biloxi Medical
25 Center. And that's why I've invited Julie
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1 here, because there are some concerns.
2 I was quite concerned, and occasionally
3 remain concerned, that Florida -- all of
4 Florida should be under the same healthcare
5 network from the VA.
6 However, the flipside of that is that Julie
7 is great. She's a ball of fire. And she --
8 and she had -- she knows she has some concerns
9 and has some problems here in the panhandle.
10 And I've asked her to come and -- and speak
11 with you for about 5 minutes about some of the
12 good things that are happening --
13 (Governor Bush entered the room.)
14 MS. HIGGINS: -- here in Bay County.
15 GOVERNOR BUSH: Welcome.
16 MS. CATELLIER: Governor Bush, good
17 morning.
18 GOVERNOR BUSH: Good morning.
19 MS. CATELLIER: To all of you on the
20 Cabinet, thank you for having me here today.
21 And, thank you, Colonel Higgins, for that
22 wonderful compliment, for giving me a few
23 minutes of your time.
24 First, let -- a little disclaimer. I live
25 in Biloxi, but my family lives in
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1 Merritt Island, Florida. So my heart is in
2 Florida.
3 And Mississippi.
4 I'd like to talk to you just briefly today,
5 give you a little overview of the work that
6 we're doing in the Department of
7 Veterans' Affairs in the panhandle area to take
8 care of America's heroes.
9 (Commissioner Gallagher exited the room.)
10 MS. CATELLIER: Veteran healthcare in
11 northwest Florida is the responsibility of the
12 VA Gulf Coast Veterans Health Care System.
13 We're based in Biloxi, Mississippi. We have
14 two medical centers on the Gulf Coast of
15 Mississippi.
16 We have an outpatient clinic in Mobile,
17 Alabama; an outpatient clinic in Pensacola,
18 Florida; and one right here in Panama City,
19 Florida.
20 Our outpatient clinics serve veterans in
21 the Florida counties of Washington, Bay,
22 Holmes, Walton, Okaloosa, Santa Rosa, and
23 Escambia.
24 Based on 1990 census figures, and with a
25 little adjustment for growth, we estimate that
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1 we serve more than 92,000 veterans in Florida
2 in those seven counties.
3 During the past year, we've provided
4 healthcare service to about 20,000 of those
5 veterans.
6 That represents a 75 percent increase since
7 1997. That's very good news for us.
8 During the same period, the combined total
9 of outpatient visits at the Pensacola and
10 Panama City clinics has doubled to more than
11 93,000 annually.
12 Growth has been consistent over the last
13 three years at about a 9 percent growth rate
14 per year, and we expect that to continue into
15 the future.
16 I'm a nurse by profession, and I have two
17 golden rules of healthcare. And my staff know
18 that those are Julie's Golden Rules.
19 The first is that health and healthcare are
20 personal, and they're a priority in a person's
21 life. And health is about more than the
22 absence of illness.
23 The second Golden Rule is that care should
24 be available when a person wants it, and where
25 they need it.
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1 I want every single patient under my
2 responsibility to receive the care and
3 consideration that I would want to give my very
4 own parents.
5 Following those guiding principals, my team
6 and I set about meeting the healthcare needs of
7 the growing veteran population we serve in
8 Florida. We've increased our capacity to see
9 patients.
10 In June of 1998, we opened the outpatient
11 clinic --
12 (Commissioner Gallagher entered the room.)
13 MS. CATELLIER: -- here in Panama City. We
14 started with two providers. Today we have five
15 providers providing that care to that growing
16 workload.
17 We've also augmented the staffing in our
18 Pensacola clinic. That's enabled us to
19 increase our outpatient visits from 45,000 in
20 1997, to 80,000 visits this year.
21 We also expanded local care for veterans.
22 And that means patients getting care where they
23 want it, in their home communities, near where
24 they live and near where their support systems
25 live.
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1 The first thing we did was we made sure
2 that mental healthcare is available in every
3 one of our outpatient clinics. And that's a
4 little departure from tradition.
5 We also added or expanded speciality care
6 in Pensacola for services like cardiology,
7 gynecology, urology, and rheumatology.
8 We have agreements where we established
9 with community providers in partnership for
10 services like optometry, mammography, and MRI.
11 We have an agreement with the Pensacola
12 Naval Hospital where patients receive emergency
13 care in their community. We also have
14 arrangements with local providers and the
15 Department of Defense for inpatient care, when
16 necessary, when the patient's unable to travel.
17 These and other changes have decreased
18 waiting times across our healthcare system. So
19 far this year, ophthalmology waiting times have
20 reduced from 52 days to 25 days; waiting times
21 to see a physiatrist, reduced from 88 days to
22 13 days; we've reduced cardiology waiting time
23 by 45 days; gynecology waiting time went from
24 61 days to nine days; and waiting time for
25 gastroenterology, which is a service in great
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1 demand, went from 105 days to 67 days.
2 And we've made the decision to approve for
3 another gastroenterologist to improve that
4 waiting time even further.
5 These changes show veterans that we care
6 about their health, that it's personal and a
7 priority, and we understand that.
8 To meet our fastest growing needs, which
9 are in audiology and optometry --
10 (Treasurer Nelson exited the room.)
11 MS. CATELLIER: -- we're increasing our
12 audiology staff at Pensacola, and we've just
13 purchased a new sound booth, our second, which
14 will be installed in the next couple of months.
15 We've also set aside an additional $300,000
16 for optometry services in the communities where
17 the veterans live.
18 Our biggest obstacle in keeping pace with
19 veteran growth is space. I can hire the staff,
20 but I've got to have somewhere for them to do
21 the work.
22 To meet that challenge, we've reached an
23 agreement right here in Panama City with the
24 Coastal Naval Station that doubles the clinic
25 space in our current area. We'll be moving
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1 into a brand new building adjacent to our
2 current clinic in 2001.
3 We submitted a proposal to establish an
4 additional brand new outpatient clinic in
5 Okaloosa County, near Crestview, in partnership
6 with the existing Air Force Reserve Clinic at
7 Duke Field. These folks are great to work
8 with, we have wonderful relationships with the
9 military.
10 That proposal's gone forward to Congress
11 for approval, and if funded, we hope to open it
12 next year.
13 In Pensacola, we've begun the planning
14 process with the Navy to build a joint family
15 practice center at the Pensacola Naval
16 Hospital. This will be a wonderful thing for
17 veterans in that community who have received
18 both their inpatient and outpatient care close
19 to home.
20 Our lease at the current clinic space
21 expires in six years, and it's my dream that
22 we'll have a brand new joint family practice
23 center by that time.
24 This a very exciting time to be providing
25 healthcare to veterans in the Florida
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1 panhandle. There's a lot of growth and a lot
2 of change.
3 We're fortunate to enjoy excellent
4 relationships with the Department of Defense,
5 with Congressional and State offices, and with
6 our veterans service organizations. We
7 couldn't do it without them.
8 As you know, no one succeeds alone.
9 We're proud of our nation's veterans.
10 Their service and sacrifice humble us. We're
11 honored to serve them in Florida, and along the
12 Gulf Coast.
13 Thank you so much for this time today.
14 GOVERNOR BUSH: Thank you very much.
15 COMPTROLLER MILLIGAN: Just quickly,
16 Governor, I had the opportunity to talk to some
17 veterans here in Panama City, and they were
18 very complimentary, Julie, with the facility
19 that they have there at the Naval Coastal
20 Systems Station, and the support they get.
21 MS. HIGGINS: You can see why I like having
22 Julie as one of my partners. She really
23 believes in -- in what we believe in, and --
24 and that is providing really quality
25 health care. And she's a good manager of
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1 the -- of the limited resources sometimes that
2 she gets.
3 And she's obviously able to -- to fight
4 really well with all those guys in the -- in
5 the -- the VA system, and get the money and the
6 support that we need here in -- in Bay County
7 and the panhandle.
8 I want to just briefly introduce -- I -- I
9 forgot to in my introduction when I talked
10 about what we did, is some of my other partners
11 who are here.
12 In addition to partnering with the
13 U.S. Department of Veterans' Affairs, who are
14 really the providers of the benefits and the
15 healthcare that veterans receive, we also work
16 with County Veteran Service officers.
17 Most people, or many people in the state,
18 think that these guys actually work for me.
19 They're really good, and I wish they did so I
20 could take the credit for it.
21 Unfortunately, the -- we -- they don't work
22 for me. They work for the counties in which
23 they reside and live. But they do a great job
24 of helping us to identify problems that we
25 might be able to help with, and helping
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1 veterans in the field.
2 Two of them are here, James Hixson, who's
3 from Bay County. He's back there somewhere.
4 And Bo Williams, who will tell you he's
5 from Guf County (phonetic). He's from
6 Gulf County, I believe.
7 And then, my final issue is a little brief
8 issue, and I know it's been -- it's been a long
9 meeting already, so I'll try to be brief.
10 You've already got a folder, and, of course,
11 I've briefed one of you already, and will
12 certainly be available to brief any of you
13 individually if you'd like to.
14 But I -- I -- I have provided my budget
15 request, which has just gone to the -- the
16 Governor as the -- and the Legislature for
17 their deliberation and approval. I think
18 it's -- it's a good budget.
19 As you know, we've -- we've really done
20 well these last couple of years, and we want to
21 keep the momentum up.
22 Last year we received the start-up funds
23 for our Broward County nursing home; we
24 received the first general revenue that we
25 received in -- that we have gotten in
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1 four years for our information technology
2 improvements; we received half of the State's
3 share of the two new nursing homes; and we
4 received $248,000 as Florida's donation to the
5 national World War II memorial, which is due to
6 break ground on Veterans Day.
7 This year, our highlights include, as I
8 mentioned before, and I will continue to
9 mention, is we need to receive the second half
10 of the State's funding for these two new
11 nursing homes.
12 This is really the first -- the first time
13 that the State has ever tried to build two
14 nursing homes at one time, and I think we can
15 do it. And certainly the Governor and -- and
16 you and the Legislature were supportive of my
17 request last year. And I have all indications
18 that they'll be supportive again this year.
19 These homes are expected -- as the home in
20 Bay County is, is expected to hire about 120 to
21 130 new people, either in -- as State
22 employees, or as part of contract services in
23 the communities.
24 So we're very excited about the opportunity
25 to bring that to the communities as well.
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1 We will --
2 (Treasurer Nelson entered the room.)
3 MS. HIGGINS: -- continue to -- we have
4 continued to request money for our benefits and
5 assistance counselors, who have assisted over
6 5,000 veterans and their family members this
7 year in obtaining about 52 million dollars
8 in -- in new benefits.
9 We will also make a small request for --
10 again, for improvements in our information
11 technology field. If we are going to continue,
12 as everyone else is, to do more with less, we
13 can do that.
14 But one of the ways we can do that is to
15 make sure our technology works for our people
16 in the field.
17 And the fourth large issue is that we are
18 raising money right now, private and corporate
19 donations, for our state World War II memorial.
20 And, of course, as we begin to build up our
21 trust fund, we will have to transfer some of
22 that -- much of that, to the Department of
23 State and the Department of Education, who are
24 our partners in building this living memorial.
25 I'm going to skip through some of that --
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1 some of the -- the other here.
2 One of the things that we will be seeking
3 to do is -- and we will be kind of piloting
4 this in our Broward County home, is contracting
5 out some of the services in the new nursing
6 homes.
7 We have identified what we feel to be
8 acceptable levels of contracting, making sure
9 that all supervisory and critical healthcare
10 personnel are retained as State employees for
11 full accountability. Then we're going to be
12 writing some really, really tight contracts,
13 which are very important when you do this, to
14 make sure that the quality of care, which is
15 first class right now, does not diminish, and,
16 in fact, perhaps improves.
17 And we'll be trying that out in our
18 Broward County home, making sure we can make it
19 work, we can work out all the kinks. And then,
20 of course, we will be moving that which --
21 to -- into the newer nursing homes in Bay and
22 Charlotte County.
23 I think I'm going to stop here, because you
24 may have some questions. And if you don't --
25 GOVERNOR BUSH: Any questions --
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1 MS. HIGGINS: -- certainly right now, you
2 can ask me, you know, later on.
3 I'll be getting your --
4 GOVERNOR BUSH: We need a --
5 MS. HIGGINS: -- answer --
6 GOVERNOR BUSH: -- motion to --
7 MS. HIGGINS: -- Commissioner.
8 GOVERNOR BUSH: -- approve the --
9 COMMISSIONER GALLAGHER: Motion.
10 GOVERNOR BUSH: There's a --
11 ATTORNEY GENERAL BUTTERWORTH: Second.
12 GOVERNOR BUSH: -- motion.
13 And a second.
14 I'm abstaining from voting on this item in
15 order to make my own budget recommendations.
16 But the motion has been seconded and
17 passed.
18 MS. HIGGINS: Thank you.
19 GOVERNOR BUSH: Without objection, except
20 for that one small one.
21 Good work, Robin.
22 (The Department of Veterans' Affairs Agenda
23 was concluded.)
24 * * *
25
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1 GOVERNOR BUSH: Department of Revenue.
2 Florida's --
3 Did I -- did I miss one?
4 COMMISSIONER GALLAGHER: Highway Safety.
5 GOVERNOR BUSH: Highway Safety.
6 I was going to -- I was going to say,
7 Department of Revenue, Florida's favorite
8 department.
9 But --
10 Welcome, Fred.
11 MR. DICKINSON: Governor, good morning.
12 First off, my name's Fred Dickinson,
13 Department of Highway Safety and Motor
14 Vehicles.
15 Our larger program areas are the Florida
16 Highway Patrol, which I think are fairly
17 self-explanatory.
18 And Representative Bense was here a second
19 ago. I just wanted to say, we're -- in
20 cooperation with the community college here,
21 we're getting ready to build a new
22 Highway Patrol station. So we, too, are adding
23 to the economy here.
24 And with your support, and that of
25 Representative Bense, we're happy to -- to
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1 start that. We'll have a groundbreaking later
2 this year.
3 One of the few stations we've got, General.
4 You remember the old days. We -- we built
5 quite a few in the '50s. We haven't built too
6 many since then.
7 Driver's license is our other large program
8 area. And we handle all the driver licensing
9 for -- for our 15 million, 13 -- 13 to
10 15 million drivers, depending on which figures
11 you read.
12 And then we also do the tag and titling
13 through your local tax collector here in
14 Bay County. And we handle all the tags,
15 titles, commercial trucks, mobile homes.
16 We used to do emissions. We're no longer
17 in that business.
18 That's -- that's our area, Governor.
19 GOVERNOR BUSH: Thank you.
20 MR. DICKINSON: Do you want to proceed
21 through the --
22 GOVERNOR BUSH: Procedure.
23 MR. DICKINSON: -- proceeding now?
24 Item 1 is request approval of the minutes
25 for the April 25th and May 23rd Cabinet
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1 meetings.
2 COMMISSIONER GALLAGHER: Motion.
3 COMMISSIONER CRAWFORD: Second.
4 ATTORNEY GENERAL BUTTERWORTH: Second.
5 GOVERNOR BUSH: Moved and seconded.
6 Without objection, it's approved.
7 MR. DICKINSON: Item 2 is request approval
8 of the quarterly report for the quarter ending
9 June 2000.
10 COMMISSIONER GALLAGHER: Motion.
11 ATTORNEY GENERAL BUTTERWORTH: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 Basically that highlights what you do in
15 real specific terms on a quarterly basis,
16 everything you just said you did --
17 MR. DICKINSON: Yes, sir.
18 GOVERNOR BUSH: -- you've got numbers
19 attached it to.
20 MR. DICKINSON: Correct.
21 We make a lot of positive contacts out on
22 the highways, we take care of about fifteen to
23 seventeen thousand people getting stopped for
24 DUI every quarter. We handle hearings for
25 them, as well as court proceedings.
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1 We do about 100,000 miles a day patrolling
2 the highway. So that's -- we encounter quite a
3 few people there.
4 We issue about 74,000 registrations a day.
5 So all of that's included in our quarterly
6 report.
7 Item 3 is the submission of accomplishments
8 for the 1999-2000 performance contract of the
9 Executive Director.
10 COMMISSIONER CRAWFORD: Motion.
11 ATTORNEY GENERAL BUTTERWORTH: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 MR. DICKINSON: And, Governor, I might
15 point out that there were two items we did not
16 accomplish in that -- last year's -- or I guess
17 end of this year's performance contract, and
18 both of those were slated -- one of them was
19 slated for this month to start, and the other
20 one is going to be 2001.
21 So everything will be accomplished but for
22 those two, and they'll be soon to follow.
23 Item 4 is submission of the performance
24 contract for the next budget year, 2000-2001.
25 COMMISSIONER CRAWFORD: Motion.
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1 GOVERNOR BUSH: Moved and seconded.
2 Without objection, it's approved.
3 MR. DICKINSON: Item 5 is our yearly
4 approval for the contract to handle
5 contingent -- on a contingent fee basis our --
6 certain forfeiture litigation that the
7 Attorney General does not handle. They handle
8 about three-quarters of it. We've got three
9 private firms that handle it where the
10 Attorney General doesn't.
11 COMMISSIONER CRAWFORD: Motion.
12 ATTORNEY GENERAL BUTTERWORTH: Second.
13 GOVERNOR BUSH: Moved and seconded.
14 Without objection, it's approved.
15 MR. DICKINSON: Incidentally, Governor,
16 those are -- we've got a minority firm. We've
17 only got three firms that do it statewide. We
18 have one minority firm, and they qualify under
19 certain guidelines for us.
20 That litigation, quite frankly, is -- is
21 shrinking as time goes on, unfortunately. But
22 I'm not sure it's because there are fewer drugs
23 on the road. But the -- the forfeiture
24 litigation seems to be drying up a little bit.
25 Item 6 is the submission of our Legislative
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1 Budget Request for 2001 and 2002. We, too,
2 have submitted those to the Governor and the
3 Legislature.
4 Roughly we're at a 9 to 10 percent increase
5 over last year's funding. Included in that is
6 about 128 positions for the Patrol. Those are
7 our only position increases, employee increase.
8 And everything else is technology related.
9 It's -- it's a -- it's a lean budget. Here
10 again, we have some of the attributes of our
11 5 percent cut embodied in this. But the full
12 5 percent per year, 25 percent is not in
13 this -- we've only got about -- I don't know,
14 3 or 4 percent. But we'll have those also
15 submitted.
16 ATTORNEY GENERAL BUTTERWORTH: Fred, what
17 is your turnover now at the FHP? I know your
18 salaries have gone up, and --
19 MR. DICKINSON: In the Patrol --
20 ATTORNEY GENERAL BUTTERWORTH: In the --
21 MR. DICKINSON: -- General?
22 ATTORNEY GENERAL BUTTERWORTH: -- Patrol.
23 MR. DICKINSON: We're quite frankly
24 about -- a little under 3 percent.
25 ATTORNEY GENERAL BUTTERWORTH: Which is
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1 pretty good. A much higher number years ago.
2 MR. DICKINSON: It's good. If we lose
3 them, typically they're in the first
4 three years. And, unfortunately, it's our
5 women and -- and minorities that we're losing.
6 I think the pay has helped. But I think as
7 the Sheriff will tell you here, we're -- when
8 we get competitive in a certain area, they
9 usually use that when they go before their
10 boards, and you see salaries jump accordingly.
11 But --
12 GOVERNOR BUSH: Well, you haven't got your
13 pay increase yet. It happens --
14 MR. DICKINSON: No, sir.
15 GOVERNOR BUSH: -- next week.
16 MR. DICKINSON: That's correct. Next
17 month.
18 GOVERNOR BUSH: Eight percent.
19 MR. DICKINSON: Eight percent.
20 Thank you.
21 In fact, I think you signed one of the
22 bills right here in Bay County.
23 GOVERNOR BUSH: I did.
24 ATTORNEY GENERAL BUTTERWORTH: Fred, how
25 much does it cost you to train a trooper?
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1 MR. DICKINSON: I think the costs today,
2 General, run about $80,000. That's equipment,
3 training, salary, the works. Twenty-six-week
4 training program --
5 ATTORNEY GENERAL BUTTERWORTH: After
6 your -- after your -- you train a trooper, and
7 you're going to lose 3 -- how many of those --
8 if you don't lose a four-year trooper -- so
9 your problem is keeping them through -- through
10 year 3.
11 MR. DICKINSON: Yes, sir.
12 ATTORNEY GENERAL BUTTERWORTH: So what
13 percentage of your zero to 3-year troopers do
14 you lose?
15 MR. DICKINSON: I would say right under
16 10 percent.
17 ATTORNEY GENERAL BUTTERWORTH: Which is --
18 MR. DICKINSON: I can get you those
19 figures.
20 GOVERNOR BUSH: Less than the State average
21 for State employees. That's still pretty high
22 if you're --
23 ATTORNEY GENERAL BUTTERWORTH: But it
24 doesn't cost that much to train most State
25 employees.
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1 GOVERNOR BUSH: That's right.
2 ATTORNEY GENERAL BUTTERWORTH: So that's --
3 that's the -- that's the real problem is -- is
4 your trooper -- your trooper's not costing you
5 a whole lot more money those first couple of
6 years. And -- and there might be some other
7 incentives we can do.
8 I know you have off-duty job assignments,
9 they can do a lot of other things that they --
10 that they can do.
11 MR. DICKINSON: We get CADs in the four
12 south -- southern counties.
13 GOVERNOR BUSH: Is there a motion?
14 ATTORNEY GENERAL BUTTERWORTH: Motion.
15 COMMISSIONER CRAWFORD: Motion.
16 COMMISSIONER GALLAGHER: Second.
17 GOVERNOR BUSH: Second?
18 COMMISSIONER GALLAGHER: Second.
19 GOVERNOR BUSH: Seconded.
20 I'm abstaining from my vote on this item in
21 order to make my own budget recommendation.
22 But passes, I assume.
23 MR. DICKINSON: That completes our agenda.
24 Thank you, Governor.
25 GOVERNOR BUSH: Thank you very much.
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1 (The Department of Highway Safety and Motor
2 Vehicles Agenda was concluded.)
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1 GOVERNOR BUSH: Department of Revenue.
2 Florida's favorite department. We love our tax
3 collectors.
4 (Attorney General Butterworth exited the
5 room.)
6 DR. ZINGALE: We -- we love working for
7 you.
8 COMMISSIONER GALLAGHER: Apparently there's
9 nothing.
10 GOVERNOR BUSH: Didn't get a second.
11 Motion dies for the lack of a second.
12 If they knew -- if they only knew how good
13 our Department of Revenue was --
14 DR. ZINGALE: We're going to --
15 GOVERNOR BUSH: -- how customer friendly it
16 was, maybe they'd have a second.
17 DR. ZINGALE: It's getting better.
18 Request approval of minutes, please.
19 COMMISSIONER CRAWFORD: Motion.
20 SECRETARY HARRIS: Second.
21 GOVERNOR BUSH: Moved and seconded.
22 Without objection, it's approved.
23 DR. ZINGALE: The second item, I'm going to
24 try to weave together a little bit about what
25 we do, our long-range plan, and our budget's
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1 submission for the coming year.
2 Unfortunately for you all, we kind of take
3 planning and budgeting pretty passionately, so
4 I'm going to take a few more minutes to --
5 GOVERNOR BUSH: Passionate.
6 DR. ZINGALE: -- try to describe where we
7 are.
8 We organized a good year-and-a-half ago by
9 business process, or service and activity, as
10 you described it. We have an ownership
11 structure down at that service, or business
12 process level, that allows us to direct change
13 and provide for accountability.
14 That ownership structure has gone out in
15 benchmarks to all 83 of our business processes
16 against not only private sector practices, but
17 also practices from model states.
18 When we have targeted, oh, in most of our
19 programs, half of the business process, which
20 is a fairly radical change. That change takes
21 place from a five-fold review. I know this may
22 sound strange, but the most significant way to
23 reengineer a business process today is to
24 change the law.
25 The Legislature and the Governor approved
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1 this when we were given the unemployment
2 compensation tax. That's scheduled to be
3 totally up and operational next Monday. It's
4 been quite a transition.
5 You do that when you repeal a law like the
6 intangible tax and the Feds did it when they,
7 through welfare reform, changed a lot of the
8 tools we have to do our child support
9 enforcement program --
10 GOVERNOR BUSH: Jim, can you give us an
11 update on the unemployment compensation --
12 (Attorney General Butterworth entered the
13 room.)
14 DR. ZINGALE: Unemployment --
15 GOVERNOR BUSH: -- in terms of the number
16 of people --
17 DR. ZINGALE: -- compensation as of
18 yesterday had 87 unemployment compensation
19 employees still looking for a job.
20 GOVERNOR BUSH: Out of --
21 DR. ZINGALE: Out of 395.
22 Those 85, ten have been offered jobs.
23 We're waiting to see between now and the next
24 couple of days whether they accept them.
25 I have a list of who all those people are.
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1 It's a little hard to communicate with them.
2 They're on somebody else's e-mail right now.
3 But we're going to continue to work with
4 them on an ongoing basis to try to find every
5 single one of them a job.
6 I think we're down to 77.
7 Most of the problem hiring areas are coming
8 in two areas: First, when the program came
9 over, we didn't ask for any high level division
10 bureau level positions. We've had a hard time
11 placing some of those people in our
12 organization. We really don't have any
13 vacancies.
14 The other areas that were difficult were
15 primarily out in the field. A lot of the rural
16 service centers that were providing that
17 service where, not only because we were asking
18 for fewer people to do the services, but we
19 didn't have service centers in those areas. We
20 have closed some service centers.
21 GOVERNOR BUSH: But you're confident you
22 can provide this service -- important service
23 for people, both businesses and people who are
24 unemployed in their need to have temporary
25 compensation to make ends meet, with how many
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1 fewer people --
2 DR. ZINGALE: Well, this year,
3 approximately 180 fewer. We expect that number
4 to -- to go up next year even more as --
5 GOVERNOR BUSH: As part --
6 DR. ZINGALE: -- a little --
7 GOVERNOR BUSH: -- a little less --
8 DR. ZINGALE: Yes.
9 And that -- that has to do a lot with the
10 technology that we're going to talk about in a
11 minute.
12 But changing the law is a major way to
13 reengineer a business process.
14 When you see our legislative package come
15 next month, it will come with a number of
16 suggestions to come in and change the way we do
17 business by -- by changing the law.
18 Obviously, introduction to technology is a
19 major way of going about doing it.
20 On the tax side, we've been doing that
21 extensively in three phases. We're in the
22 middle of the second phase right now, and I'll
23 talk about that in a little bit.
24 Privatization. Each one of these business
25 processes is looked at as a privatization
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1 alternative. It's a review, it's broken down.
2 We're still researching some options. A lot of
3 them are already privatized.
4 Best practices is probably what we're most
5 noted for in creatively trying to engage
6 private sector companies in other states, try
7 to steal best practices, try to go down into
8 our service centers and service up best
9 practices.
10 And finally, as Archean as this may sound,
11 but most private sector companies have adopted
12 a problem solving technology. If it's
13 Motorola, it's called sic sigma. It's the
14 12-step method in IBM.
15 We use AQPs, Association for Quality and
16 Participation Problem Solving Methodology. It
17 helps you go into business processes, cut
18 costs, eliminate waste.
19 A team of ours last year reengineered the
20 estate tax law, won the USA Today Cup
21 Competition nationally. It works. It's the
22 part that causes costs to go down, it doesn't
23 cost you much money to do it.
24 But each of these business processes have
25 been reviewed in that manner. We link the plan
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1 with the budget. We had a very extensive
2 three-year plan that targeted these particular
3 processes for change.
4 Highlights of where GTA is, as I said
5 before, technologically, general tax, the
6 revenue side, 2,400 hard working employees
7 trying to collect that 26 billion dollars from
8 33 taxes.
9 In general tax, we received two this year,
10 unemployment comp, a substantial change. We've
11 received over the next two years, telecom, a
12 massive reorganization and simplification of
13 how the telecommunication tax works. It's
14 moving from city and county administration to
15 the state. Both of those moves will be
16 accomplished with huge savings.
17 Phase I though has been in place now for a
18 couple of years. It's brought us the
19 capability to do about 18 billion dollars a
20 year electronically, about 8 billion dollars a
21 year with no paper attached to it.
22 It went in to the front-end business
23 processes and reengineering remittance
24 processing from the goal of trying to collect
25 all this money in a complete electronic
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1 paperless environment.
2 Our website activities have gone out
3 aggressively to use that form of communication
4 to register. We will certainly have
5 credit card payments up and on-line.
6 That's behind us. That has taken place.
7 Phase II is what we're in the midst of
8 doing right now, working with SAP and Deloitte
9 to totally change the accounting system, not
10 only for the Department, but also for the
11 taxpayers.
12 That change that's going on right now is
13 going to afford us the opportunity to do
14 one-stop registration, one-stop enforcement.
15 And that's Phase III, seeing that work its
16 way all the way through the system.
17 So we're not asking for much in the gen--
18 in the general tax area. Some updates in
19 technology, some expansion of our imaging
20 equipment.
21 The plan though is in perfect sync for the
22 kind of investment that takes place and goes
23 hand-in-hand with a 25 percent reduction in
24 FTE.
25 We are quite confident that the savings
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1 that are taking place in unemployment comp,
2 telecom, the savings that will take place when
3 the intangible tax is repealed, and this
4 technology, working its way down the system,
5 our five-year plan contemplates a 25 percent
6 reduction in FTE.
7 And I think that the staff is dedicated to
8 make that happen. It shows that it can invest
9 in technology if you lower costs.
10 You could not only achieve those reductions
11 in this particular program, with an increase in
12 service associated with those reduced costs.
13 That's not true in all three of our
14 programs.
15 You get over on the property tax side and
16 our budget and long-term plan contemplates a
17 major improvement in that program in the
18 current 12 months by redirecting the scarce
19 resource we have. We've had to move staff all
20 over the state to selected counties for this
21 year's review process.
22 We expect this week to get a letter from
23 the Auditor General saying that our plan is
24 responsive to all of his recommendations, and
25 we had three lingering ones last week. We
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1 worked on it over the weekend, and we think
2 we're going to get approval this week.
3 So the property tax program, the oversight
4 program is asking for a large increase in its
5 trust fund. It's asking for 50 FTEs, the only
6 place where we're asking for FTE.
7 We've got 135 in the program today. It's
8 asking for approximately a half a million
9 dollars in litigation expenses. We don't want
10 to turn down roll, but there is an anticipation
11 that this year in this coming cycle, with the
12 changes we're making in the process, we may be
13 turning down rolls this year for the first time
14 in probably 15 years. To do that, you have to
15 get ready to defend your work product in court.
16 So we are working feverishly to try to
17 produce all the changes that are requested by
18 the Auditor General. We agree with them, we're
19 behind them, staff has already got a number of
20 them in place.
21 But that is a substantial increase, and I
22 don't expect that program in the short period
23 of time, next five years, to be requesting any
24 reductions in staff. I think they're going to
25 need every one of those people to do what they
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1 need to do.
2 Child support is kind of at a crossroads.
3 It is at a place in time where --
4 GOVERNOR BUSH: Jim, can you talk a little
5 closer to the microphone --
6 DR. ZINGALE: Certainly. I'm sorry.
7 GOVERNOR BUSH: -- and tell us how many
8 people receive child support in our state.
9 DR. ZINGALE: Approximately --
10 GOVERNOR BUSH: How many kids?
11 DR. ZINGALE: -- 1.1 million kids receive
12 services, 850,000 cases. When we turned the
13 program -- when we got the program
14 approximately six years ago, we had some of the
15 worst numbers in the country.
16 In the last six years, we've risen from one
17 of the worst programs in the country, to about
18 average. I can't say that today we're one of
19 the best. But you can --
20 I look at a half a billion dollars of
21 uncollected child support, and that disturbs
22 me. On the front side, we have a substantial
23 amount of children trying to get established
24 both paternity and support orders.
25 The changes that we did make though gave us
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1 a record year last year. We had the largest
2 collections, 12 percent, with a declining case
3 load. We have made substantial improvements.
4 But from the big picture, they're
5 incremental. We have to look at ways to
6 radically change the performance of the child
7 support enforcement program.
8 The crossroads kind of comes this way: You
9 see our legislative package this year, and next
10 year you'll see us not only working with the
11 State Court Administrator to look at ways of
12 changing the law to make the processes more
13 efficient, but you're going to see us come with
14 a technological change. We call it CAMS.
15 I hate acronyms, too, and don't remember
16 what that one stands for.
17 But I did go to Washington a number of
18 months ago. We do have a federally certified
19 computer system, and I went to Washington, and
20 I basically described our system as fairly
21 obsolete.
22 Our computer system was designed coming out
23 of the 1970s. It's cobalt based technology
24 it's hierarchial. That may not mean anything
25 to people, except it's very, very difficult to
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1 use, next to impossible to change.
2 I do look at it as an Edsel rolling down
3 the road. If something breaks, it's hard to
4 find parts.
5 The Feds made a simple change in the law
6 that out of our 850,000 cases, it's going to
7 impact 200 to 300 a month. We've created a
8 manual distribution process to do that.
9 It's going to require us a year to put that
10 computer program in place. At one point in
11 time, for three months, it's going to take
12 22 people to change that computer system so
13 that we can make an accurate distribution to
14 about 200 to 300 people.
15 If we don't do that, we're subject to
16 5 million dollars in sanctions. Makes
17 absolutely no sense to me.
18 But we are coming up with a program. The
19 Feds have approved us as one of three states to
20 go forward and propose a total change in our
21 computer system. It is 70 to 85 percent
22 Federally funded, depending on the module.
23 We've got a 6 million dollar item here.
24 We've got it in three phases. Phase I is
25 to attack that half a billion dollars on the
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1 back end of uncollected child support with a
2 modern computer system.
3 On the front end, working with the General,
4 we expect to have a paperless system on the
5 front end. Instead of big legal documents like
6 this, there's no reason why it can't be totally
7 electronic. We do it on the tax side, why
8 can't we do it on the child support side?
9 It is a program though that is driven by
10 the Federal government. We have to go up there
11 and ask for permission.
12 We are asking permission today in the child
13 support area to at least propose those changes
14 forward. And it is a kind of crossroads.
15 If -- if we do get the kind of computer support
16 we're asking for, our staff very seriously
17 looked at the fourth and fifth year, and
18 believe we can start achieving some dramatic
19 position savings, and achieve the kind of goals
20 we want to in the program.
21 But it is at a crossroads.
22 Those were our three programmatic areas.
23 We request permission to submit these to the
24 Governor and the Legislature.
25 GOVERNOR BUSH: Is there a motion?
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1 COMPTROLLER MILLIGAN: Move approval.
2 ATTORNEY GENERAL BUTTERWORTH: Second.
3 GOVERNOR BUSH: Moved and seconded.
4 I'm abstaining from my vote on this item to
5 make my own budget recommendation, but the
6 motion passes.
7 DR. ZINGALE: The third item is, we request
8 permission to submit the Department's capital
9 improvement plan.
10 COMPTROLLER MILLIGAN: Move approval.
11 COMMISSIONER CRAWFORD: Second.
12 GOVERNOR BUSH: Moved and seconded.
13 Without objection, it's approved.
14 DR. ZINGALE: And the fourth item is
15 request approval for the Department of Revenue
16 to enter into contracts between the Department
17 of Revenue and 16 certified public accounting
18 firms listed below for tax compliance and
19 services.
20 This is our contract audit program, about a
21 2 million dollar program. These are the large
22 ones, over 100,000. We have smaller ones under
23 25,000. We have 32 percent minority
24 participation in the program.
25 Request approval.
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1 COMPTROLLER MILLIGAN: Move approval.
2 COMMISSIONER CRAWFORD: Second.
3 GOVERNOR BUSH: Moved and seconded.
4 Without objection, it's approved.
5 COMMISSIONER CRAWFORD: Governor, I have a
6 quick question.
7 GOVERNOR BUSH: Yeah. Please.
8 COMMISSIONER CRAWFORD: Very quick.
9 When you start turning down these county
10 tax rolls, we're going to hear about that. Is
11 there a common theme that you're anticipating
12 as a problem?
13 DR. ZINGALE: Rolls not in substantial
14 compliance in law, overall rolls by strata,
15 under 90 percent of -- of just value.
16 We have targeted counties, we have talked
17 with them, we have showed them the data that
18 gives us some concern. We have pledged our
19 support to help them.
20 My goal is not to turn down a roll. Our --
21 our goal is to try to get property appraisers
22 to submit tax rolls in compliance with the law.
23 We've offered technical assistance.
24 The ones that were on the margin of where
25 they might have problems all know who they are.
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1 And we have offered assistance and help, but we
2 have told them that as our ability to generate
3 our oversight improves dramatically, if the
4 County falls below 90 percent, we will turn
5 down the roll.
6 And I can assure you, we've extended every
7 courtesy to them in terms of help and
8 assistance, and those that know who they are,
9 know who they are.
10 GOVERNOR BUSH: Okay.
11 Thank you.
12 (The Department of Revenue Agenda was
13 concluded.)
14 * * *
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1 GOVERNOR BUSH: State Board of Education.
2 (Secretary Harris exited the room.)
3 MR. PIERSON: Good morning.
4 Item 1 on the agenda today is the education
5 budgets.
6 The first presentation would be the State
7 University System budget by Chancellor
8 Adam Herbert.
9 COMPTROLLER MILLIGAN: Can't hear.
10 COMMISSIONER CRAWFORD: That mic's tricky
11 there.
12 DR. HERBERT: Good morning, Governor --
13 GOVERNOR BUSH: Good morning.
14 DR. HERBERT: -- members of the State Board
15 of Educ--
16 GOVERNOR BUSH: Want to move the mic up so
17 everybody can hear in the back?
18 DR. HERBERT: How about that? Is that
19 working any better?
20 GOVERNOR BUSH: I think it is.
21 DR. HERBERT: Okay.
22 Today I am very pleased to present to you
23 the 2001-2002 Legislative Budget Request for
24 the State University System. This budget
25 request reflects the hopes, and also the
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1 aspirations of Florida's ten public
2 universities, which this year are serving
3 approximately 230,000 students.
4 It builds on the five-year strategic plan
5 that was adopted by our Board two years ago.
6 It includes funding to implement programs,
7 goals, and policies that have been established
8 by the Florida Legislature and the Governor.
9 Finally, it reflects population growth and
10 also economic development needs of the state,
11 which are increasing, as you know, at an
12 exponential rate.
13 Several of you have observed, to compete in
14 new global technological markets, Florida must
15 substantially increase the number of high
16 skilled workers in several high tech areas.
17 In short, this budget request is part of a
18 much larger blueprint designed to improve
19 undergraduate and graduate education, increase
20 the number of degrees awarded annually, enrich
21 the State's economic climate, assist the
22 business community, and enhance the quality of
23 life of our citizens through expanded research
24 and public service activities.
25 The overall Legislative Budget Request of
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1 2.8 billion includes an increase of 321 million
2 dollars.
3 Allow me, given the time constraints that
4 we have, just to highlight the most pertinent
5 items within our budget request. I'd like to
6 put them into five categories.
7 The first category is costs to continue.
8 Our budget request includes 61.3 million
9 dollars for the State's ten public universities
10 to continue its current programs. This money
11 is for such things as new space coming on-line;
12 casual insurance premiums; annualization of
13 salaries; and also rent increases that are
14 required by the Department of Management
15 Services for BOR offices, Board of Regents
16 offices.
17 Of particular significance is the
18 38.2 million dollars to fund the Major Gifts
19 Challenge Grant Program. As you know, that
20 program provides State matching funds for
21 private gifts in the areas of university
22 scholarships, professorships, and endowments.
23 This request is the same amount as appropriated
24 this current fiscal year.
25 The second category is mission support.
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1 The -- in this area, what we're asking for is
2 support of our missions of instruction,
3 research, and public service. There's
4 approximately 128 million dollars incorporated
5 into this category. I think a few of the items
6 included herein are worth highlighting.
7 It requests 25 million dollars to
8 strengthen our universities' infrastructures.
9 This is our top priority. The request would
10 increase our funding by about $730 per FTE.
11 And just to place this in context, we're
12 currently $900 below the national average of
13 public universities in funding per FTE. So
14 this would not take us up significantly, but
15 I think it is a -- it is a reasonable request
16 as we begin to deal with the realities of what
17 it costs to operate these institutions.
18 Each university has identified specific
19 initiatives that would be supported within the
20 context of this category. It includes
21 enhancing teaching, improving services to
22 students such as academic advising, library
23 access, strengthen faculty development
24 initiatives, and also increasing our capacity
25 to compete for, and to conduct externally
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1 funded research.
2 It includes 25 million dollars of
3 nonrecurring funds for campus technology.
4 You've already heard comments this morning
5 about how important technology is. These
6 resources would be used for everything from
7 hard wiring buildings to purchasing and
8 installing software in our student computing
9 labs.
10 The first priority, of course, for us today
11 is to enhance the backbone of the campus
12 network by installing and upgrading wiring.
13 Because of the -- the half-life or life
14 span of computer hardware, the fact that it
15 does continue to shorten, we have
16 particularized significant needs in this area.
17 I'm sure each of you can appreciate the
18 challenges that we have. We're trying to
19 graduate students who are able to work in high
20 tech industry. We recognize that they must
21 have the skills necessary to move into those
22 jobs readily.
23 We're dealing with the fundamental
24 challenge of -- of accommodating much more
25 robust software. We've got to have the -- the
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1 memory capability sufficient to utilize those
2 so the -- the presence of more sophisticated
3 computer hardware is extremely important.
4 Another challenge that we're dealing with
5 is, as we begin to move increasingly from
6 analog technology to digital -- to digital
7 technology, we have a problem there of -- of
8 assuring that we can again provide the kind of
9 training that our students need.
10 And this cuts across all segments of what
11 we do. Whether it is the more expensive
12 nuclear magnetic resonators, spectrometers in
13 our -- in our scientific courses, video
14 equipment, CAD computers in -- in -- in
15 engineering as well as in architecture, all of
16 that becomes very important.
17 And what we have increasingly begun to
18 recognize is that every four to six years, it's
19 important for us to -- to begin to -- to focus
20 priority attention on this area.
21 You also will notice that it does request
22 40.4 million dollars for faculty and staff
23 performance pay increases.
24 This is very important to our system.
25 If Florida is going to build the kinds of
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1 outstanding universities that its people want,
2 we simply must be able to reverse the track,
3 and then to retain the best and brightest
4 faculty anywhere in the country.
5 Unfortunately, Florida's salary structure
6 hinders that effort, because we are becoming
7 less competitive every year in the marketplace.
8 And just to put this in perspective, our
9 faculty salaries among the Type I institutions,
10 our largest, most prestigious research
11 universities, rank from 58 to 121 out of 142 of
12 these institutions.
13 And yet we aspired to -- to have the
14 University of Florida, for example, to be
15 ranked among the top ten public research
16 universities in America. It's 52 with regard
17 to -- to the salaries.
18 Our Type II institution, we rank from 70th
19 to 152, out of 229 institutions.
20 Among the ten largest states in America,
21 I -- I hate to tell you this, but our faculty
22 salaries rank last.
23 This is a serious problem. Again, it gets
24 worse every year. Last year the Governor and
25 the Legislature, with your support, addressed
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1 salary deficiencies of the K through 12 level.
2 This year, we hope that you will -- will --
3 will assist us in making the -- the salaries of
4 university faculty a much higher priority so
5 that we can begin to -- to maintain a -- a set
6 of -- of incentives that will enable us to
7 again attract and keep the very best.
8 You also will see that we are requesting
9 12.3 million dollars in an optional
10 campus-based differential tuition. This
11 3 percent differential tuition would be spent
12 on the recommendations of a campus based
13 committee that would include student
14 representation as is specified in statute.
15 The universities would decide the level of
16 differential tuition, and the projects funded
17 with this money would be subject to the
18 appropriate accountability measures and
19 standards.
20 We also are requesting 16.3 million dollars
21 for library resources. This request is based
22 upon a model that has been developed by our
23 provosts and our library directors.
24 It would allow for the purchase of an
25 equivalent level of books, journals, and
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1 subscriptions, and databases as was funded in
2 the 1999-2000 budget. And it will begin to
3 bring our university library clinic per FTE up
4 to the national average of public universities.
5 Let me now focus on -- on undergraduate
6 education. This is a -- it's the third key
7 component of our -- of our proposal.
8 As you're aware, Florida lags behind the
9 rest of the nation in the number of
10 baccalaureate degrees that it -- it -- it
11 confers. This is creating major problems
12 for -- for our business community. And this
13 will continue to have a dampening effect as a
14 consequence on economic growth and development
15 activities within the state.
16 Our system has outlined several policies to
17 boost undergraduate degree production, and also
18 to increase the quality and scope of our
19 programs.
20 The LBR includes 124 million dollars to
21 accomplish that goal. Let me just mention a
22 few items included there.
23 We have 45.9 million for undergraduate
24 enrollment growth. That -- this would allow
25 5265 additional FTE, or approximately
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1 10,328 students at the lower and upper division
2 levels to study in the State University System.
3 I think you realize the baby boom bubble
4 moving through the K through 12 system will hit
5 its peak in 2007 when more than
6 130,000 students will graduate from the State's
7 public high schools.
8 That's an increase of about 40,000, just
9 since 1995, and clearly indicates that more
10 capacity must be available on our campuses.
11 We're asking for money in support of
12 undergraduate enhanced. The Strategic Plan
13 includes specific missions for each of our ten
14 universities.
15 As part of that effort, each --
16 (Secretary Harris entered the room.)
17 DR. HERBERT: -- university has developed
18 specific projects to accomplish its mission.
19 The combined request includes priority
20 items identified by each university to improve
21 the quality and delivery of undergraduate
22 education.
23 The fourth area is graduate education,
24 research, and economic development.
25 Florida not only ranks well below the
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1 national average in the number of -- of
2 undergraduate, but also the number of graduate
3 degrees awarded annually.
4 The 132 million that we're identifying in
5 our budget request for graduate education,
6 research, and economic development has impacts
7 well beyond our campus boundaries. It is one
8 of the areas that the business community
9 considers when deciding to relocate, or to
10 expand facilities.
11 As the Silicon Valley; the Research
12 Triangle in North Carolina; in Massachusetts,
13 there's another example of that, increasing
14 university research facilities are making a
15 difference in terms of the ability of a state
16 to grow its own high tech companies, and also
17 to attract new industry into the state.
18 We want to assure that our universities are
19 able to play the same kind of role in this
20 state as we attempt to -- to -- to recruit
21 companies that add significant value with high
22 paying jobs as we prepare for the generational
23 shift from ours to the next.
24 And just to highlight a few items that are
25 included in this category, we're -- we are
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1 requesting 26 million dollars for graduate
2 enrollment growth. This would allow an
3 additional 1364 graduate student FTEs into our
4 system, or about 2447 students.
5 The one thing to keep in mind here is that
6 the State University System is the primary
7 source of all graduate education in the state,
8 particularly in scientific and technical areas.
9 What we are proposing here is that we
10 afford greater access to -- to graduate
11 students to pursue their education in Florida,
12 to be able to -- to live here, and contribute
13 to the -- to the long-term economic growth and
14 development of the state.
15 We're also asking for funds to enhance
16 graduate and professional education, research,
17 extension, and service. This totals 45 million
18 dollars.
19 As with the undergraduate enhancement
20 request, this includes the top projects that
21 have been developed and identified by each of
22 the universities. Projects range from
23 improving a microelectro mechanical systems
24 program, and developing programs and high tech
25 industries, to upgrading research facilities,
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1 expanding our capacity to respond through IFAS
2 to the growing agricultural needs of the state,
3 and -- and also increasing the recruitment of
4 doctoral students.
5 We're asking for 11.5 million dollars for
6 law schools. The Legislature last year
7 authorized two additional law schools at FIU
8 and Florida A&M University.
9 This money would allow continued
10 development, with 6 million going to FAMU and
11 5.6 million to FIU.
12 We're asking for 15.8 million for graduate
13 waivers. If Florida is going to be more
14 competitive in attracting and retaining quality
15 graduate students, we must increase our
16 financial packages for those -- those students.
17 Finally in this category, we have
18 18.6 million for research corridors and
19 economic development. And the high tech --
20 technology corridor along I-4 is the primary
21 beneficiary of this funding.
22 Seventeen point six of this is for the
23 final year of a three-year commitment to Lucent
24 Technologies that has allowed our universities
25 to improve their research and instructional
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1 activities.
2 The final broad category is service to the
3 State. The 16 million dollars requested in
4 this area demonstrates the commitment of each
5 of our universities to enhancing
6 public education at all levels.
7 We regard the -- the challenges that have
8 been presented to us by the Governor, we take
9 it very seriously. And what we want to do is
10 to play a major role in the -- the enhancing of
11 public education in this state.
12 We currently have hundreds of partnerships
13 with K through 12 schools, and -- and --
14 throughout the state. We have 10 million
15 dollars included in this request specifically
16 for work in the K through 12 system. We
17 believe very strongly that by forging alliances
18 with our public education partners, and sharing
19 our expertise in K through 12, achievement will
20 rise.
21 Our efforts will include projects ranging
22 from school readiness to curriculum
23 development.
24 I'm just very proud of what our colleges of
25 education are now beginning to do to reach out
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1 in ways that they have not before. And we are
2 going to be, in fact, having in Orlando
3 tomorrow a meeting between our university
4 presidents and a number of superintendents
5 across the state to -- to develop and actually
6 strengthen further the partnerships that we
7 have there.
8 Other service activities in our budget
9 include the Ringling Center for Cultural Arts,
10 and a number of IFAS activities across the
11 state.
12 Let me just make one final observation
13 here, and this relates to a request for an
14 across-the-board tuition increase.
15 As required by Florida Statute, we are
16 requesting a 10 percent across-the-board
17 tuition increase. This would result in
18 students paying 22 percent of the total cost of
19 their education, which does continue to be
20 below the 25 percent established as a State
21 policy goal.
22 With this proposed increase, Florida would
23 continue to rank as having the 49th lowest
24 tuition among the 50 states.
25 Members of the -- of the Board, as you can
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1 see from our budget request, the State
2 University System is committed to being an
3 active and vibrant partner in the process of
4 educating more students, conducting more
5 research, and engaging in more public service
6 than ever before.
7 Our goal, which we hope you share, is to
8 build one of the best university systems in
9 America, and this budget request reflects that
10 high aspiration.
11 Great states need great university systems.
12 This budget propels us down that path.
13 Thank you very much for the opportunity of
14 providing, I hope, a clear, but brief picture
15 of what is incorporated in our -- our budget
16 request.
17 GOVERNOR BUSH: Thank you, Chancellor.
18 Any questions?
19 Thank you very much for coming.
20 DR. HERBERT: We appreciate it.
21 MR. PIERSON: Executive Director,
22 David Armstrong, will present the
23 Community College budget.
24 GOVERNOR BUSH: Welcome, David.
25 MS. ARMSTRONG: Good morning, Governor.
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1 Let me tell you first that I have already
2 made a contribution in this community. About
3 25 miles back up the road on 231, I stopped and
4 had breakfast this morning.
5 GOVERNOR BUSH: I thought he was going to a
6 ticket.
7 MR. ARMSTRONG: And there is a -- there's a
8 nice bargain basement sports jacket sitting in
9 Hardee's somewhere for someone.
10 And so I beg your pardon for my casual
11 attire before you this morning. I -- it's
12 probably still there when I drive back --
13 GOVERNOR BUSH: I just thought you were
14 trying to show that the community colleges were
15 kind of -- were working people, and that --
16 MR. ARMSTRONG: Well that, too, Governor.
17 GOVERNOR BUSH: -- and jobs that --
18 MR. ARMSTRONG: That, too.
19 You have a copy of my presentation. I'll
20 try to run through it pretty briefly with you.
21 Let me say that this budget request is
22 looking toward the future for the 80 percent of
23 Florida -- Floridians who go through public
24 higher education in this state, the 850,000
25 students, unduplicated head count, who enroll
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1 in Florida community colleges this past year.
2 And on page 2 of the presentation, you see
3 the various groups that we serve, that you're
4 already familiar with. And quite a number of
5 the recent prior year high school graduates; a
6 large number of returning degree holders with
7 bachelor's degrees is one of our fastest
8 growing populations, coming back to get the job
9 training, to get job training skills; adults
10 who are looking for their first degrees, who
11 maybe five or ten years out of high school,
12 realize they need some more training to be able
13 to get a good job.
14 And other workers that need an upgrading of
15 skills, perhaps they're underemployed and
16 unemployed.
17 And, Governor, to give a little local angle
18 to this, let me introduce the President from
19 Gulf Coast Community College here.
20 Dr. Bob McSpadden is here with us this morning.
21 GOVERNOR BUSH: Doctor, welcome.
22 MR. ARMSTRONG: I think you all know him,
23 and know the fine job that they do here. It's
24 one of the finest community colleges in the
25 nation, and he's certainly one of the finest
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1 community college presidents.
2 Just to the east of us, in Port St. Joe,
3 I think you're very much aware of the good work
4 that you've supported the college in doing with
5 the unemployment issues that have been suffered
6 in Port St. Joe.
7 The college two years ago had the foresight
8 to open up a new branch campus there.
9 Literally one week after we had the
10 groundbreaking open house for that new campus,
11 the plant, the major employer of Port --
12 Port St. Joe, closed its doors.
13 Fortunately the college was there and ready
14 to start offering classes. Eight hundred and
15 fifty students enrolled immediately.
16 You pumped through the State and Federal
17 government a lot of dollars there to help the
18 unemployed workers. And many workers are still
19 being trained there by the college.
20 We had to move in five new portables in
21 addition to the new campus immediately. We
22 used technology and distance learning to
23 connect to this main campus here to --
24 (Commissioner Gallagher exited the room.)
25 MR. ARMSTRONG: -- provide student services
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1 and actual courses, and training programs in
2 addition to that.
3 So that's just an example, Governor. We
4 now are serving between 1500 and 2,000 people
5 over in that community.
6 On slide 3, we're demonstrating to you the
7 performance that we're very proud of in our
8 community college system. We have seven of the
9 top ten degree producing community colleges in
10 the nation, in Florida's community colleges, of
11 the 28 community colleges.
12 Three out of the top ten are the top
13 minority graduate producers in the nation. And
14 you know our record --
15 (Commissioner Gallagher entered the room.)
16 MR. ARMSTRONG: -- the transfers to our
17 community coll-- on to our university system,
18 both public and private.
19 Page 4, our demand continues to grow.
20 Regardless of the great job that we are doing,
21 there are phenomenal opportunities out there.
22 We have serious shortages in information
23 technology jobs, critical shortages in
24 teachers. And a majority of Florida's teachers
25 start in a community college and then transfer
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1 on to a university.
2 Great shortages in the nursing profession
3 now. A recent Orlando Sentinel article spoke
4 to 5100 jobs in the nursing profession that are
5 open right now. Florida's community colleges
6 train 75 percent of the registered nurses in
7 this state.
8 So there are needs out there. And on and
9 on in every profession in -- and occupation
10 that we all talk to, construction, et cetera.
11 And so our budget request is moving toward
12 ways that we can help meet the worker
13 shortages, train more workers for Florida's
14 economy.
15 We're asking you to help us invest in the
16 future in several different ways. If you'll go
17 to page 7, I've summarized in very simple form,
18 four issues in our budget request.
19 (Commissioner Crawford exited the room.)
20 MR. ARMSTRONG: Our basic operating budget,
21 which we outline the essence of on page 8,
22 64 million new dollars that we're asking for
23 that goes to salaries for our employees; it
24 helps fund the operation of new facilities that
25 are coming on-line that are providing
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1 opportunities for training programs. It has a
2 performance component built into it that
3 rewards institutions for better performance.
4 It also has dollars available for libraries and
5 the computers that we need in our institutions.
6 The second major part of our budget request
7 is 25 million dollars in a program that we call
8 our Horizon in Critical Jobs. And I want to
9 spend just a minute on this with you.
10 Governor, last year in your budget request,
11 you moved for this request. We have a priority
12 to start new programs that lead toward
13 associates degrees in four critical areas that
14 we're focusing on: Information technology,
15 telecommunications, healthcare, and
16 aviation/aerospace industry.
17 Governor, I want to thank you for
18 appointing me to your Florida -- IT Florida
19 Task Force, and we've been working very closely
20 with business and industry in the information
21 technology area. We all know of the tremendous
22 opportunities and job openings that are in this
23 area.
24 If you'll look with me on the following
25 page, page 10, I want to show you the growth in
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1 our enrollment and productivity in the IT area.
2 In 97-98, we had just over
3 9,000 enrollments in IT programs. We've grown
4 to this past year, 14,000 enrollments in those
5 programs.
6 (Commissioner Crawford entered the room.)
7 MR. ARMSTRONG: There's more opportunity to
8 do more, but it takes dollars to invest in
9 those kind of programs.
10 And we have proposed a new program to grant
11 awards to institutions to start these high
12 cost, high tech programs. They will be done on
13 a competitive basis.
14 We just have awarded about 10 million
15 dollars that the Legislature provided us with
16 this past year. And the list of the awards is
17 on page 11, if you'll take a look at that.
18 Tallahassee Community College is receiving
19 an award for $850,000 to focus on the digital
20 television industry, media, broadcasting, and
21 virtual simulation. Tremendous demands in that
22 area as the whole media market moves into the
23 digital arena.
24 Valencia Community College and Seminole
25 Community College are being awarded
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1 approximately $850,000 to start a new program
2 for the IT area, for e-commerce, especially in
3 the security area, working with business and
4 industry there.
5 Brevard Community College, $800,000 to
6 support the aerospace technology industry in
7 that area.
8 South Florida Community College, one of our
9 smaller institutions in Avon Park, has a very
10 unique proposal to work with six of the power
11 companies in the state to train technicians for
12 the power industry.
13 With all the changes that are going on in
14 the power industry these days, there are a lot
15 of new technical kinds of jobs opening. So
16 we're focusing there.
17 And then two of our colleges, Pensacola and
18 Miami-Dade, are both being awarded $600,000
19 each for this past year's appropriation to work
20 in the telecommunications, wireless, digital
21 communications industry, which is rapidly
22 growing in our state.
23 So the unfortunate thing is, those are --
24 those are six great proposals, and awards are
25 going to them. There's a long list of others
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1 that are needed in communities, proposals that
2 we're offering that we didn't have the
3 resources to do. So we're asking for
4 25 million dollars to start up the funding in
5 those areas.
6 Two other areas I want to hit on briefly
7 with you. In the distance learning area, we
8 have been making great progress. In
9 four years' time, the number of students who
10 have enrolled in distance learning courses in
11 our system has grown from 20,000 students
12 four years ago, to 61,000 students enrolled in
13 distance learning courses.
14 Great opportunities there. And we're
15 asking for approximately 14 million dollars to
16 continue to build out our e-agenda, as we call
17 it. That's everything from broad band access
18 to the institutions to development of programs
19 and licensure of Courseware.
20 And then our final outstanding story,
21 Governor, is our matching programs. Over the
22 last 17 years, 17 years ago, the Legislature --
23 and some of you were there -- started the
24 matching programs for Florida's community
25 colleges.
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1 Since 17 years ago, 119 million dollars
2 have been generated in private management --
3 excuse me -- 166 million dollars in private
4 contributions have been given to community
5 colleges, with 119 million contributed on
6 behalf of the State to match that.
7 We're now up to this year, a request of
8 40 million dollars that's in the bank that the
9 private sector has contributed for matching
10 programs. That's an increase of approximately
11 14 million over the past year.
12 Governor, that's a very quick and brief as
13 I could give it, overview of what we are
14 requesting this year, and I look forward to
15 discussing it in more detail with each of you
16 individually.
17 GOVERNOR BUSH: Thanks, David.
18 Hope you find your coat.
19 MR. ARMSTRONG: Thank you.
20 GOVERNOR BUSH: Commissioner.
21 COMMISSIONER GALLAGHER: Thank you,
22 Governor.
23 Quickly, just talk about the Department of
24 Education.
25 As the Commissioner of Education, I have
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1 quite an array of responsibilities. Some of
2 those are to serve on three boards: The State
3 Board of Education, which we are sitting here;
4 the State -- Board of Regents; and the State
5 Board of Community Colleges, which David is
6 Executive Director.
7 The State Board of Education, which all the
8 members you see here, is the chief policy
9 making body of public education in Florida, and
10 has the authority to adopt rules for
11 improvement of the State's system of
12 public education, as long as those rules are
13 based on provisions of law.
14 Public education's basically a
15 fundamental -- a function and responsibility of
16 the State, and it's our responsibility to
17 ensure efficient operation of all schools, and
18 adequate education opportunities for all
19 children.
20 As the Commissioner of Education, I have a
21 duty to advise and counsel with the State Board
22 of Education on all matters pertaining to
23 education, and to recommend to the State Board,
24 actions and policies to be acted upon.
25 Within the Department of Education, we have
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1 a variety of responsibilities. We have over
2 3500 schools statewide, with a total student
3 enrollment of about two million three hundred
4 and seventy-six thousand students.
5 We handle such diverse issues as teacher
6 certification, curriculum and assessment,
7 administration of the Bright Future Scholarship
8 Program, and providing the funding for the K-12
9 schools.
10 Any of you that would like more information
11 on Bright Future Scholarship Program, or any of
12 the educational issues, please stop by the
13 agency fair that we have a table outside by the
14 lunch.
15 And, Governor, our budget, if I may sort of
16 get through it as quick as I can, I'll try to
17 keep us on time.
18 Our budget request requests our four
19 priority initiatives, which is: One, the
20 highest student achievement; two, quality
21 educators; three, safe schools; and, four,
22 educational technology.
23 The highest priority is, of course, high --
24 highest student achievement, and we're
25 requesting an increase of 878.9 million in
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1 State and local funds.
2 (Attorney General Butterworth exited the
3 room.)
4 COMMISSIONER GALLAGHER: This will increase
5 the per student allocation by 302.39, a 5.99
6 increase, to about $5,351.38 per student.
7 We're requesting 686 million for
8 supplemental academic instruction, which
9 includes an additional 23.6 million for
10 remedial instruction for before and after
11 school, and for summer school programs.
12 Some of these items include exceptional
13 student education, guaranteed allocation of
14 707.1 million requested.
15 Attendance, incentive supplement,
16 10 million for districts that exceed State
17 average attendance, or improve percentage rate
18 of attendance over the prior year.
19 School Recognition Program: One hundred
20 million dollars, a 40 million dollar increase,
21 $100 per student for a -- for a -- schools that
22 have improved one grade.
23 Assistance for low performing schools,
24 39.9 million; grants to improve student
25 learning; readiness to learn,
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1 120 million point -- 120.9 million for
2 preschool program, a 17.1 million dollar
3 increase.
4 Instructional materials, 217.9 million, a
5 25.8 million increase, fully funds the Florida
6 Association of District and Instructional
7 Materials, Administrators Study.
8 Reading initiatives, 7.2 million,
9 emphasizing on 4 through 12 reading.
10 Assessment and evaluation, 46.3 million,
11 funding for full implem-- implementation of the
12 FCAT in reading and mathematics to all students
13 in grades 3 through 10; writing assessments at
14 4, 8, and 10th grade; and a field test; new
15 science assessment; further development of
16 computer based strategies to teach educators
17 about --
18 (Attorney General Butterworth entered the
19 room.)
20 COMMISSIONER GALLAGHER: -- the FCAT; and
21 development of strategies to assist the
22 Sunshine State Standards.
23 Bright Future Scholarships, 204.7 million,
24 for an estimated 105,458 students at an average
25 of $1941.
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1 Also, 113 million for needy based schol--
2 for need based scholarships, and 13 million for
3 other scholarship and grant programs.
4 In workforce development, 795.7 million, a
5 57 million dollar increase.
6 School choice, 12 million dollar, extended
7 year; 11 million dollar, 27 million dollars for
8 charter schools --
9 (Treasurer Nelson exited the room.)
10 COMMISSIONER GALLAGHER: -- facility, and
11 equipment.
12 We're requesting the following allocations
13 related to quality educators: Teacher
14 training, 37.4 million; teacher recruitment and
15 retention, 60 million; teacher professional
16 development, 16 million.
17 A key item is year 2 of the teacher mentors
18 school program.
19 Excellent teaching program, 19 million for
20 the National Board of Professional Teaching
21 Standards Application, Subsidies and Salary
22 mentoring bonuses for certification.
23 Salary bonus for outstanding teachers in D
24 and F schools, 12.25 million, 3500 maximum;
25 continued teacher lead program, 15.27 million,
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1 $100 per teacher for classroom materials.
2 In the area of safe schools, we're
3 requesting the following allocations: Safe
4 school allocation of 90 million dollars, a
5 14.6 million dollar increase for after school
6 programs, alternative school programs, and
7 school resource officers.
8 School transportation, 451.6 million
9 increase funding to 80 percent of the preceding
10 two years expenditures, currently year funding
11 71.3 percent.
12 Recommendations and fiscal estimates for
13 changes to hazardous walking condition
14 guidelines are being developed.
15 Finally, in the area of educational
16 technology, we're requesting a public school
17 technology allocation of 94.4 million allocated
18 to districts based on FTE to purchase and
19 replace equipment and increase Internet
20 connectivity.
21 Florida on-line high schools, 6.17 million
22 to continue development.
23 By the way, there's over 5,000 students
24 signed up on Florida On-Line High School this
25 year.
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1 And I recommend the approval of the budget
2 as explained.
3 GOVERNOR BUSH: There's a motion.
4 COMMISSIONER CRAWFORD: Second.
5 GOVERNOR BUSH: I abstain from my vote on
6 this item in order to make my own budget
7 recommendation.
8 But the motion is --
9 COMPTROLLER MILLIGAN: I abstain also.
10 GOVERNOR BUSH: You're abstaining?
11 COMPTROLLER MILLIGAN: Yes, sir.
12 GOVERNOR BUSH: That's the first time
13 that's ever happened.
14 Excellent.
15 It still passes, I assume.
16 We have four votes for passage, I think.
17 Motion passes.
18 Would you like to explain, because I'm
19 curious?
20 You don't have to if you don't want to.
21 But --
22 COMPTROLLER MILLIGAN: I don't choose to at
23 this time.
24 GOVERNOR BUSH: Okay.
25 COMMISSIONER GALLAGHER: If he abstains
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1 from that, I'll --
2 GOVERNOR BUSH: Let me know whenever --
3 ATTORNEY GENERAL BUTTERWORTH: He signs
4 the --
5 GOVERNOR BUSH: -- it's time to know.
6 ATTORNEY GENERAL BUTTERWORTH: -- he signs
7 the checks.
8 GOVERNOR BUSH: Very good.
9 Is that -- do --
10 COMMISSIONER GALLAGHER: Item --
11 GOVERNOR BUSH: -- you have other items.
12 COMMISSIONER GALLAGHER: -- we have Item 2.
13 GOVERNOR BUSH: I'm sorry.
14 MR. PIERSON: Item 2 is a presentation of
15 statewide improvement of F schools. It's for
16 information.
17 MS. WILLETT: Governor, Commissioner,
18 members of the Cabinet, my name is
19 Andrea Willett. I work for the -- for the
20 Department of Education.
21 As a former classroom teacher, I'm looking
22 at the body language, and the 154-minute
23 Power Point presentation that we had originally
24 planned to present. We've decided perhaps we
25 could cut that just a little bit.
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1 And I hope that's with your --
2 GOVERNOR BUSH: No, I think you should go
3 ahead.
4 MS. WILLETT: Not going to do it.
5 GOVERNOR BUSH: That would be a big dog.
6 ATTORNEY GENERAL BUTTERWORTH: Let -- let's
7 just wait.
8 MS. WILLETT: About a month ago, you saw
9 two schools that had moved from an F to an A.
10 And the presentation today is simply about the
11 other 76 schools -- we're talking about 59,000
12 students across the state of Florida, and the
13 work that they do.
14 The issue becomes: How does one move from
15 a school of low performance to a school of high
16 performance.
17 The State is charged with assisting schools
18 as they move this journey of performance. We
19 had 78 schools to have been repeats. Two of
20 them closed during the beginning of the year.
21 So we ended up at the end of the year with 76.
22 We had although that smaller number of F
23 schools, over 600 D schools. And so the State
24 is also trying to put this system up.
25 And today in the audience are five of the
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1 ten team leaders that work directly with those
2 schools. Region I, which is the panhandle,
3 representing that region is Jenne Palmer.
4 In Region II, representing northeast
5 Florida, Nancy Livesay, who works also with
6 Jim Howard in that area.
7 Region III is the eastern coast of Florida.
8 That would be Harriett Holiday, who's here, and
9 Joyce Swartz.
10 Region IV is the west coast of Florida, the
11 Gulf side, Sandy Dilger, and -- who's here, and
12 Thelma Nolan.
13 And in Region V, south Florida,
14 Nydia Cummings-Swingle, who is here, who also
15 works with Angela Stanford.
16 An enormous amount of work went into the --
17 to the schools, and we have a Power Point
18 presentation that breaks it down region by
19 region, school by school, district by district,
20 for all 78 schools in those 15 districts.
21 Let me just focus on the results.
22 We touched the schools -- we, being the
23 Department of Education, as a State agency --
24 touched the schools over 1300 times, whether it
25 be an on-site visit, or some sort of service
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1 provider provision, with a customer
2 satisfaction level of over 90 percent each
3 time.
4 The schools that increased their student
5 performance, 100 percent of them increased in
6 writing, and that's how they got off the list.
7 Fifty-three percent of them increased their
8 mathematic scores, which is students -- kids
9 that we're talking about when we talk about
10 scores, we're talking about kids -- changing
11 their performance level.
12 Twenty-eight percent in reading; 24 percent
13 in reading and mathematics, and in writing, all
14 three subject areas.
15 Schools said that they -- the focus that
16 they got, the focus support that they got from
17 the State, from the District made a difference.
18 The school leadership was extremely
19 dynamic, and they were absolutely pleased to
20 know that they were not there by themselves.
21 The focus on the alignment of curriculum,
22 instruction, and assessment -- curriculum being
23 the Sunshine State Standards -- appropriate
24 instruction for each and every child, and the
25 assessments that followed --
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1 (Treasurer Nelson entered the room.)
2 MS. WILLETT: -- that focus on the
3 curriculum made sense, and -- and was a good
4 way to work.
5 There was a focus on academics. Not a lot
6 of lost time in these schools. They were not
7 fooling around doing anything other than
8 focusing on going about the business of work.
9 No downtime.
10 But the biggest thing was the focus on
11 student achievement. It was no longer
12 acceptable to say whether or not something had
13 been taught, it is only acceptable to determine
14 whether or not something has been learned.
15 And that's a big shift in public education.
16 So imagine 59,000 students, and with the
17 high school students from the area that have
18 been in and out of the chamber. Multiply one
19 student that we've seen on these campuses by
20 59,000.
21 Fifty-nine thousand children increased
22 their student performance in 78 different
23 schools, and 15 different districts as a result
24 of focused efforts of educators -- on District
25 level educators, and State level of service
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1 providers.
2 There are four schools currently in the
3 state for this coming school year that are --
4 have a grade of F, and only about 400 schools
5 that have -- will have a grade of D.
6 For that same level of service, intensive
7 focus, and on-site, and high touch, as well as
8 high tech, will be offered to each and every
9 one of the schools through the services of the
10 people like this, and the other people in the
11 Department that they represent.
12 Thank you very much.
13 COMMISSIONER GALLAGHER: Governor, if I may
14 just, for the State Board of Education, thank
15 our team leaders who spent a great deal of time
16 during the day, during the night, on weekends,
17 working in their respective regions with the
18 individual schools, teachers, principals, and
19 in order to -- to continue to push academic
20 excellence in the schools and student
21 performance.
22 And I thank you all very much for the great
23 job that you've done.
24 GOVERNOR BUSH: I'd like to --
25 Commissioner Gallagher and I went to a school
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1 in Jacksonville.
2 I just want a 30-second story. I know
3 we're running a little late, and everybody's
4 hungry for a hot dog.
5 But the principal of the school, when the
6 school was -- was rated D was upset about that,
7 probably angry a little bit at the
8 Commissioner, and maybe more angry at the
9 Governor for suggesting that we grade schools,
10 and the stigma attached to a D or an F grade.
11 I sensed a little personal frustration with
12 me, at least when I visited with her. But she
13 told the story about how they went through a
14 visioning process. This is an elementary
15 school. And imagine -- these are 400 urban
16 core kids in -- in north Jacksonville.
17 And they -- each child had a vision
18 statement they had to come up with. And the
19 kindergartners would draw their vision
20 statement, because they can't write
21 particularly well; and the fourth graders,
22 of course -- or fifth graders, whoever's doing
23 Florida Writes -- fourth graders, I guess, they
24 were writing because they had to prepare for
25 the -- for the test.
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1 And in this -- middle of this process --
2 she thought that the vision should be that the
3 school would become a C.
4 But after awhile, the kids themselves
5 started defining the school as an A school.
6 And they would have nothing but an A school.
7 And so this whole process refocused their
8 efforts to raise their expectations up even
9 higher. And the principal, who is a very
10 charismatic leader, just redoubled her efforts
11 and the teachers bought in, and General, the
12 Navy showed up --
13 COMMISSIONER GALLAGHER: True.
14 GOVERNOR BUSH: -- Marines, kind of --
15 showed up and -- and volunteered, and
16 businesses showed up.
17 And this school was rated an A school, and
18 they had soaring achievement, of course, in
19 Florida Writes, but also awesome increases in
20 math and reading.
21 And the -- the lesson of the story is that
22 no longer in Florida do we -- are we going to
23 have lower expectations for kids because of the
24 color of their skin -- these kids were
25 principally African American -- or the level of
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1 the family income, or family structure, or
2 where you live.
3 And it is the tribute of a whole lot of
4 people to provide assistance. But I would just
5 like to applaud particularly the principals of
6 these schools and the teachers that made it --
7 made it happen. Because they're the ones that
8 really made it happen.
9 COMMISSIONER GALLAGHER: Just let me
10 mention that the -- we did go through an appeal
11 process, and we heard appeals from 73 schools
12 in regards to their grades. And there's lots
13 of reasons for those appeals. There were
14 errors thought to have happened, and all kinds
15 of things.
16 And we have issued a press release, which
17 y'all have a copy of that basically breaks down
18 those -- where they -- where the -- where
19 changes were made according to those appeals.
20 And actually what we ended up with, with
21 22 schools moved from B to A, three schools
22 went from C to A, one school went from C to B,
23 and four schools went from D to C.
24 So --
25 GOVERNOR BUSH: We got the money?
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1 COMMISSIONER GALLAGHER: About -- yeah. We
2 need about a million two, and we have it.
3 And about 26 schools remained unchanged
4 that -- that asked to -- to have a -- a change.
5 And they were not changed.
6 GOVERNOR BUSH: Thank you.
7 COMMISSIONER GALLAGHER: And I think
8 that -- we finished on Item 2 now?
9 MR. PIERSON: Yes.
10 GOVERNOR BUSH: Yes.
11 COMMISSIONER GALLAGHER: Item 3.
12 GOVERNOR BUSH: Item 3.
13 MR. PIERSON: Item 3 are appointments and
14 reappointments to the Education Standards
15 Commission: Michelle Bullard, 9-30-01;
16 Pamela Holmes, 9-30-02; Anete Vasquez, 9-30-03;
17 Joe Balchunas, 9-30-03; Barbara Riley, 9-30-03.
18 There are four reappointments:
19 Molly Magee, Steve Bouzianis, Jerry Lafferty,
20 and Mr. Willie Horton, all 9-30-03.
21 COMMISSIONER GALLAGHER: Motion.
22 GOVERNOR BUSH: Wiley Horton.
23 ATTORNEY GENERAL BUTTERWORTH:
24 Wiley Horton.
25 MR. PIERSON: Wiley Horton.
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1 GOVERNOR BUSH: Not Willie Horton. That
2 would --
3 COMMISSIONER GALLAGHER: He's reappointed.
4 GOVERNOR BUSH: There's a motion to approve
5 this.
6 Without objection, it's approved.
7 Good God.
8 MR. PIERSON: Item 4 is appointments to the
9 Education --
10 GOVERNOR BUSH: Let's hope he's not on
11 that.
12 MR. PIERSON: -- appointments to the
13 Education Practices Commission: Patsy Rayburn,
14 Deborah Orr, Thomas Morris, and Kathy Whitson,
15 all 9-30-04. Two of those are additional
16 positions which were added by the legislation
17 this year.
18 COMMISSIONER GALLAGHER: Motion.
19 COMMISSIONER CRAWFORD: Second.
20 GOVERNOR BUSH: Moved and seconded.
21 Without objection, it's approved.
22 MR. PIERSON: My apologies to Wiley.
23 GOVERNOR BUSH: Exactly.
24 I know Wiley.
25 (The State Board of Education Agenda was
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1 concluded.)
2 * * *
3 COMMISSIONER GALLAGHER: Motion on the
4 minutes for July 25th.
5 ATTORNEY GENERAL BUTTERWORTH: Second.
6 GOVERNOR BUSH: Moved and seconded.
7 Without objection, it's approved.
8 Item 2.
9 COMMISSIONER GALLAGHER: Like to defer
10 Item 2 from the July 2-- it's been deferred
11 I guess. And now we want to recommend deferral
12 to 10-24.
13 GOVERNOR BUSH: Motion to defer.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Second.
16 MR. GREEN: Substitute Item 3 --
17 GOVERNOR BUSH: Moved and seconded.
18 Without objection, it's approved.
19 Thank you.
20 COMMISSIONER GALLAGHER: Move to defer
21 Item Number 3 to 11-29.
22 COMMISSIONER CRAWFORD: Second.
23 GOVERNOR BUSH: Moved and seconded.
24 Without -- to 11-29, is it?
25 COMMISSIONER GALLAGHER: 11-29.
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1 GOVERNOR BUSH: Moved and seconded, motion
2 to defer.
3 Without objection, it's approved.
4 COMMISSIONER GALLAGHER: Move to -- to
5 defer Item 4 to 10-24.
6 COMMISSIONER CRAWFORD: Second.
7 GOVERNOR BUSH: Moved and seconded.
8 Without objection, it's deferred until
9 10-24.
10 MR. GREEN: Substitute Item 5 is a request
11 to sell 15 acres by the Board of Regents, and
12 acceptance of a bid of $150,125.
13 COMMISSIONER GALLAGHER: Motion.
14 COMMISSIONER CRAWFORD: Second.
15 GOVERNOR BUSH: Any discussion?
16 Moved and seconded.
17 Without objection, it's approved.
18 MR. GREEN: Item 6 is consideration for
19 authorizations that require 100 percent
20 interest in 81.99 acres in East Everglades CARL
21 project.
22 COMMISSIONER GALLAGHER: Motion to approve.
23 COMMISSIONER CRAWFORD: Second.
24 GOVERNOR BUSH: Second.
25 There's a motion and a second.
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1 Any discussion?
2 Is there -- is the appraisal here --
3 appraiser?
4 MR. GREEN: No.
5 Yes, sir. The Water Management, yes, sir.
6 GOVERNOR BUSH: I'm just curious to know,
7 when you appraise something that's 5 acres per
8 unit --
9 I can't find my little calculation now.
10 But it was something like a hundred and --
11 MS. CASTILLE: -- seventeen.
12 GOVERNOR BUSH: Oh, how you doing?
13 MR. FINCH: How are you?
14 GOVERNOR BUSH: -- a hundred and seventeen
15 thousand dollars per lot -- or per acr-- per --
16 per unit was the appraised value. And this
17 property, as I recall, is out about as far as
18 you can go before you run into the Everglades.
19 Are there -- and if you're going to --
20 you know, if you've got -- I assume that it's a
21 little low, so you're going to have to put your
22 fill in to -- to at least -- for the pad for
23 the home, and that is an additional cost.
24 If you add all this up, you're talking
25 about $600,000 homes, or something like that?
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1 MR. FINCH: Sir, let me take a crack at
2 this one. We had --
3 COURT REPORTER GILBERT: Your name.
4 COMMISSIONER GALLAGHER: Name?
5 MR. FINCH: I'm sorry. I'm Frank Finch,
6 Executive Director for the South Florida Water
7 Management District.
8 GOVERNOR BUSH: Congratulations on the vote
9 yesterday, by the way.
10 MR. FINCH: Yes, sir. I was going to
11 congratulate you for your leadership.
12 GOVERNOR BUSH: No. I'm congratulating
13 you.
14 MR. FINCH: Since you brought it up, I -- I
15 stuck this in my briefcase for those --
16 GOVERNOR BUSH: My favorite paper.
17 MR. FINCH: The headline says --
18 COMMISSIONER GALLAGHER: Still haven't --
19 MR. FINCH: -- Senate Votes 85 to 1 to Save
20 the Everglades.
21 GOVERNOR BUSH: That's a nice -- nice
22 headline.
23 MR. FINCH: Nice one to frame and keep.
24 Sir, what I think I can tell you about
25 this, this project is part of the water
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1 preserve area. And this is one of the
2 foundations of the restudy plan, which is to
3 capture water. This is one of the areas that
4 will capture water.
5 GOVERNOR BUSH: Right.
6 MR. FINCH: As far as the appraisal goes,
7 we had seven comparable properties that we
8 looked at. And these were all private sector
9 sales. No government sales. All private
10 sector.
11 Each one of them was comparable, and -- and
12 this property that we're seeking your approval
13 for today are 82 acres, plus or minus, is
14 23,000 per acre.
15 GOVERNOR BUSH: Right. But it's 16 units.
16 It -- it's based on -- the appraisal's based on
17 a -- a use that will -- you can't do mining
18 right now, but you can use it -- it's ag use,
19 which means --
20 MR. FINCH: It's ag use.
21 GOVERNOR BUSH: -- that you can either grow
22 something, which I don't think is appropriate
23 in that location; or you can build 16 units on
24 5 acres per unit. And the cost of that per
25 unit is about $116,000.
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1 That's a fairly high price normally --
2 I mean, I'm just -- I used to be in this
3 business, close enough to -- to vaguely
4 remember it. And I think that we're talking
5 about four hundred to five hundred thousand
6 dollar homes.
7 Are there four and five hundred thousand
8 dollar homes in the area?
9 MR. FINCH: No, sir. Not -- not that I'm
10 aware of.
11 GOVERNOR BUSH: So are we -- are we valuing
12 this the right way?
13 I just -- this is the same question I kind
14 of asked -- I know the General went to see it.
15 COMPTROLLER MILLIGAN: I did.
16 GOVERNOR BUSH: Any updates on the --
17 COMPTROLLER MILLIGAN: Well, it's -- it's
18 been awhile since I went down there to look at
19 it after our meeting when we deferred it.
20 I just was in the area, and said I'll go
21 out and look at this piece of property, and I
22 did.
23 I also -- not to question the folks that go
24 out and -- and appraise property, and adjacent
25 property and other property in the area, but I
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1 did look at some, and talked to some realtors.
2 And while I'm not happy with the price, it
3 seems to be the going price in the area. Even
4 though I mean it is out -- it's not out in the
5 boondocks. But it's -- it's getting away from
6 mankind. It's -- it is --
7 GOVERNOR BUSH: That's the definition of
8 boondocks.
9 COMPTROLLER MILLIGAN: It is -- it is -- it
10 is the -- kind of the going price. I mean,
11 there's a -- there's a stable down the road
12 that this guy's really proud of, and he's got a
13 big price on it. And --
14 GOVERNOR BUSH: All right.
15 COMMISSIONER GALLAGHER: But many --
16 COMPTROLLER MILLIGAN: It is agricultural
17 area.
18 COMMISSIONER GALLAGHER: But we're -- we're
19 going to end up buying a whole bunch of
20 property out in this area.
21 Are we leading the charge in getting the
22 prices up?
23 COMPTROLLER MILLIGAN: No, I don't think
24 so. Not based on what I looked at in that
25 immediate area. It's --
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1 GOVERNOR BUSH: Well, we're all --
2 COMPTROLLER MILLIGAN: -- it's right on 27.
3 It is one of the main arteries that -- granted,
4 it is agriculture right now, and -- and,
5 you know, we -- we bought another piece of
6 property just a little south of there that has
7 a completely different environment. And we
8 bought it for about 8,000 bucks an acre, as I
9 recall.
10 So it is dependent on the area, it is
11 dependent on the access.
12 GOVERNOR BUSH: Well, for your -- for your
13 friends in Bay County, General Milligan has a
14 well-earned reputation for being a stalwart
15 protector of the taxpayers' dollars.
16 So I will stop --
17 COMMISSIONER GALLAGHER: Approval.
18 GOVERNOR BUSH: Approval is a good word --
19 COMMISSIONER GALLAGHER: The bulldog --
20 GOVERNOR BUSH: -- for it. A bulldog.
21 So if -- if it's all right with him, I'm
22 not going to worry about it anymore. There you
23 go.
24 MR. GREEN: Governor, Eric Draper would
25 also like to speak on this item.
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GOVERNOR BUSH: He doesn't have to. Unless
he really --
COMMISSIONER GALLAGHER: Is he trying to
kill it or pass it?
GOVERNOR BUSH: Does he want it to pass --
MR. DRAPER: I waive my time, Kirby.
GOVERNOR BUSH: Thank you, Eric.
There's a motion and a second.
Any other discussion?
Without objection, it's approved.
MR. GREEN: Substitute Item 7, recommending
deferral.
COMMISSIONER GALLAGHER: Defer to 10-10.
GOVERNOR BUSH: On what number?
COMMISSIONER GALLAGHER: Number 7.
GOVERNOR BUSH: Number 7?
Motion to defer and a second.
Without objection, it's approved.
MR. GREEN: Item 8 is a 20-year release of
deed restriction and 20-year -- 20-year renewal
thereafter. And I have three speakers on that.
The first speaker is Rudy Milby.
GOVERNOR BUSH: Welcome, sir.
MR. MILBY: Good morning.
It's still morning as long as you haven't
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had a wiener, isn't it?
GOVERNOR BUSH: Good point.
How are you doing?
MR. MILBY: I want to -- I want to welcome
all of this high level government to our
community because you brought good weather with
you.
GOVERNOR BUSH: There you go.
MR. MILBY: We're very pleased.
GOVERNOR BUSH: If you want to speak a
little bit louder into the microphone, it'd be
great.
MR. MILBY: Yeah. My level -- voice level
is pretty low.
Is that coming up now?
GOVERNOR BUSH: Can y'all hear back there?
No. Just put the mic a little closer to
you --
MR. MILBY: I am attempting to address this
submerged land problem, which I call an old
petunia that comes up about every spring on
these two marinas here in Panama City.
It is the opinion of a lot of citizens here
that we believe there's been very poor
management here, which has brought about
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somewhat a distasteful situation to these
marinas.
And I'd primarily like to address what --
the paperwork I've received from the Department
heads there in Tallahassee is to -- maybe
the Board is now entertaining to restrict the
reverter, and to take away the public purpose.
I believe the -- to take away the public
purpose would be in violation of Section X --
or Article X, Section 11 of the State
Constitution.
I know that there's been a real problem in
these marinas. I mean, it seems that people
who have leases here in the past, or who were
managers, and have done 10-year stretches in
the Federal penitentiaries, the Andersons, the
Mauldins, Pasco Cain, a number of people -- a
number of our choice citizens, have done from
four to ten years out of these two marinas --
GOVERNOR BUSH: Kind of the kiss of death.
MR. MILBY: -- out of these two marinas.
And in the St. Andrews Marina, we had a
gentleman up there who's done two or three
terms while he still held the lease. And the
same thing you had here with Anderson.
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It's been a real collamoration (sic) here,
and I'm not going to attempt to take up a lot
of time, because I know we're all getting close
to the weiners.
But I -- I simply am going to try to bring
to the attention that there is a lot of people
in this community that don't want a gate put
across these two marinas. Because that's what
the City will do if the Board takes away
these -- this reverter, and this public purpose
out of this conveyance, they'll put a gate
across them.
I have seen where they spent $27,000 for an
architect that does have the gate included.
And what people my age would see the
architectural design of the St. Andrews Marina
would look like what was termed in the '60s as
the flower girl garden.
There would be gazebos, gate across the
exit -- across the entrance to the marina, and
would not have no public access. It'd be two
gazebos in the center of the piers, which would
restrict all flow of traffic in and out of
these marinas.
I would suggest -- I hope, without taking
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up any more time, I'd give you an insight. I
know I -- I've come to Tallahassee a number of
times, I've talked with the staff at DEP,
and -- and look at your -- I'd suggest that you
look at your correspondence from your own legal
department to the City of Panama City setting
out the very conditions and problems that exist
here. There is a real problem here between
this -- the -- the City government and the
citizens of this community.
And -- and that is the -- I mean, we
certainly -- I don't -- I don't think there's
anyone in this community wants this -- any part
of this destroyed. We -- we're very proud of
this.
It's -- it's been something that is
enjoyable, unless you have a Court order
against you, like me, because I reported
narcotics activity to the City Manager, they
went and got a Court order and I've not been
able to enjoy using these facilities, and could
be arrested today for being on them.
And that's how distasteful it is here,
gentlemen.
GOVERNOR BUSH: We appreciate you coming.
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MR. MILBY: Thank you.
GOVERNOR BUSH: And maybe Kirby will be
able to answer some of the questions that --
MR. MILBY: I would be glad at any time to
sit down with anyone at the legislative level
and really -- where we have time to really --
and I have documentation on this stuff, and
bring it to the attention of people who could
work with it.
Thank you.
GOVERNOR BUSH: Thank you, sir.
MR. GREEN: Brenda Smith.
MS. SMITH: Pass those around.
COMPTROLLER MILLIGAN: I'd be glad to.
MS. SMITH: Hi. My name is Brenda Smith --
COMMISSIONER GALLAGHER: Pull -- pull that
down.
There you go.
MS. SMITH: Hello.
My name is Brenda Smith and I'm a citizen.
I'm running for public office, but I'm here as
a citizen.
And, you know, a picture is worth
1,000 words. And if you'll look at that
brochure, and you look at those little kids,
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and you look at that fence that's over
submerged sovereign land, the -- the little
brochure that I just gave you, and you look at
the fence they put up there, and they put,
no trespassing.
Well, luckily, through my efforts, that
fence is now down, and those kids are enjoying
that.
But that's what Rudy's trying to say to you
is we are thankful for everything that
Butterworth has done to fight to protect our
public's access to the water's edge, to
submerged lands. And we're fighting to help
him.
And -- so when you do this with the marina,
just we ask that you don't do that reverter,
that you don't do anything that would deny the
public access to the sovereign lands.
And I appreciate it.
GOVERNOR BUSH: Thank you very much. Thank
you for coming.
Can you sign -- Ms. Smith, can you sign the
register --
MS. SMITH: Oh, okay.
GOVERNOR BUSH: -- there?
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MR. GREEN: The next speaker is Kevin Wood.
GOVERNOR BUSH: Mr. Wood, welcome.
MR. WOOD: Good morning, Governor --
GOVERNOR BUSH: Good morning.
MR. WOOD: -- other Board --
GOVERNOR BUSH: Afternoon.
MR. WOOD: -- members.
Before talking on -- on this issue, and
briefly, as -- keeping this short, I'd like to
thank Secretary of State Harris for helping to
resolve an issue regarding the access to voter
registration records.
I appreciate her personal assistance,
and -- and Governor Butterworth --
General Butterworth.
I just promoted the gentleman.
Okay. And also, you know, we had a problem
here where we could not get copies of
indictments from the Clerk of our Court without
blacking out the name of the grand jury
foreperson. And an opinion from
General Butterworth helped us to resolve that
issue as well.
I offer my thanks.
I am also -- my name is Kevin Wood. I am a
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citizen in Bay County and Panama City, been
here for about 22 years. And during that
period of time, citizens such as Mr. Milby;
and, of course, Brenda Smith; and -- and others
of us, we have studied a lot of the activities
that have gone on in this county. And we can
do nothing but classify a lot of these issues
as -- as public corruption.
And we've repeatedly been frustrated
because we've not been able to get
investigations into a lot of issues here in
Bay County. And the issue surrounding the
marinas, the St. Andrews Marina and the
downtown marina, as Mr. Milby pointed out,
there has been a history of repeated illegal
activities that have occurred in
this meeting -- at this marina involving
cocaine, smuggling, use, trafficking, a number
of managers -- I've gotten paperwork and
documents, you know, that backup what Mr. Milby
has said.
I am also a candidate for public office.
There's at least three candidates in Bay County
that have basically gotten tired of what's
going on in Bay County. And the marinas are a
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good example of what is allowed to continue to
happen over the years.
These marinas were illegally filled -- as
the Cabinet, you know, sitting as the Board of
Trustees, should know -- back in the '50s,
without obtaining a lease from the
State of Florida for these sovereign submerged
lands.
And there's been a continuing battle over
the years between the City of Panama City and
the State of Florida, trying to bring the City
into line to get proper and legal leases for
the use of this property.
And as we trace the history, you can see
that there has been a number of private
interests, and criminal interests, that have
used these marinas in order to profit from
them, either legally or illegally.
And we have never seen, throughout this
50-year history, since the '50s when this
marina was illegally filled in, a proper lease
between the City and the State of Florida.
So the subleases that have been issued to
entities, such as Jimmy Mauldin,
Charles Francis Anderson and -- and others, we
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don't believe were ever legal subleases,
because there was never a legal lease between
the City and the State of Florida.
Now, finally, after this 50-year episode,
we are now looking, and finally getting the
marinas into compliance and under proper
leases.
In 1991, I believe, the Board of Trustees
issued a quitclaim deed that basically gave the
illegally filled marinas to the City of
Panama City. And attached to that lease
requirement was a restriction that this marina
only be used for public purposes.
Otherwise title of this marina -- the
filled-in portions -- and, of course, I'm not
talking about the boat slips where it still is
submerged lands, you know, that that property
would then revert back to the State of Florida.
And as I understand that at this time,
there's consideration to either negate or to
minimize the public restrictions. And that I
would ask that the Board consider that there
has been a long history of illegal use of these
submerged lands, you know, for private purposes
and for criminal purposes.
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And again I would, again, thank the
Comptroller's office and the Fraud
Investigations Unit for their effort in
bringing Jimmy Mauldin and the Cristos,
you know, eventually to trial, and to be
sentenced in Federal Court for the criminal
acts that they were proven to have engaged in.
But this episode in Bay County needs to
come to an end, that -- government is in
Bay County for the public trust. It is not for
making private profit for these entities that
have a beeline to the County treasuries, or to
the public treasuries so that before this
marina, public purpose restriction is relaxed,
I would advise against it, you know, based on
the interest of the people in the state of
Florida and Bay County.
Thank you.
GOVERNOR BUSH: Thank you very much.
MR. GREEN: Governor, the last speaker is
Rowlett Bryant, who's the City Attorney. He'll
answer some of these questions, and I'll
follow-up with --
GOVERNOR BUSH: Very good.
MR. BRYANT: May it please the Governor and
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members of the Cabinet.
My name is Rowlett Bryant. I'm the
City Attorney. I've served in this capacity
since 1970.
Give you some background of the marina. In
1956, the City condemned this waterfront.
After condemning the waterfront, the City
undertook to float a bond revenue issue to
build the marina that you have here today.
The issuing of bonds was contested by the
citizens. It was contested on the basis that
we had private enterprise as a part of the
marina structure. That included
Bobby Carswell's barber shop that you may have
heard something about. We had a filling
station, we had a Four Winds restaurant, we had
a fish house, we had a fish processing plant,
and an ice house all a part of this.
The case went to Supreme Court, and the
Supreme Court ruled that -- that though these
were private enterprises, they do not destroy
the overall public purposes of this marina.
Those uses were deemed incidental to that.
The only one that we have left today that
was part of the original construction is
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Bobby Carswell's barber shop. We have one
other person occupies a portion of our
structure, and that is Harbor Realty.
You have a total of 1600 square feet that's
being used for private purposes. All the rest
of it is devoted to public purpose. And the
State Game and Fish Commission occupies an
office free, together with a boat slip, for
their use here in -- in our area.
The Four Winds restaurant has been removed,
the filling station has been removed. The fish
house and the ice plant, processing plant has
been removed.
So those are the only two private interests
we have left.
The marina involves 22 acres. Some of it's
uplands that the City owns, the majority of it
all belong to the State. We have a Bay County
library -- or pardon me -- it's the Northwest
Regional Library over here to the right. You
have the City Hall structure here. You have
the auditorium across the street from us.
This marina's been devoted totally to
public purposes since we constructed it. It
cost 7 million dollars.
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We, at the insistence of the public,
reacquired the lease that is outstanding on the
boat slips from Jim Mauldin.
What happened back in the late '50s and
early '60s was that the Anderson deep sea
fishing fleet operated out of here. They had a
commercial operation, and they had a pleasure
operation for people that went out fishing.
For the giving up -- the interruption of
their business, which was some several years --
two or three years, during the condemnation,
during the trials, and everything, the City
gave them a 50-year lease, which would have
expired in 2008.
So the City reacquired that lease for
three-and-a-half million, we spent another
three-and-a-half million on improving the
facilities itself. And we've got about 25,
28 million dollars involved in here.
We don't have a real affluent society, as
you see in other cities on the coast,
particularly in south Florida. We need this
marina, we need private industry down here to
help us make it a more useful facility for the
public.
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We have all our 4th of July events here, we
have all the graduations over here of the
Bay County high schools in the auditorium, we
have a public ramp on the weekends. You can't
get down here on account of the boats and the
trailers.
We have Oktoberfest down here, we have the
fireworks in July. We have to close the
streets coming in here on the big holidays so
we can accommodate the people. We cannot
accommodate cars and people.
So, you know, the City has worked very
hard, it's been most respectful to the State
regarding the use of this marina as a public --
GOVERNOR BUSH: Can you -- can you --
I'm sorry to --
MR. BRYANT: Yes, sir.
GOVERNOR BUSH: -- cut you off, but --
MR. BRYANT: Sure.
GOVERNOR BUSH: -- can you answer the
question of public access?
MR. BRYANT: Well, I -- I can --
GOVERNOR BUSH: It sounded like you were
answering as you spoke there, but --
MR. BRYANT: I cannot --
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GOVERNOR BUSH: -- is there going to be a
fence --
MR. BRYANT: -- concede --
GOVERNOR BUSH: -- across this place?
MR. BRYANT: No, there's not going to be a
gate across this place. We reserve the right
to make all people that have slips remove their
cars on those important weekends that we make
everything available to the City where we have
activities.
But we don't have anywhere to eat down
here. We need somebody to have eating
facilities, or do something for the public,
playgrounds, and bring families.
And the City is a big park and recreational
and public facility type of government. And a
lot of people in our county cannot afford to
pay money to come down here.
The attack about this being an illegal
landfill, that is not true. We got a -- a
permit from the Corps of Engineers to fill this
land. There's laws on the books and in the
Administrative Code that would permit us to
apply for a deed from the State to this
property.
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So we're not here wrongfully. We're not
here illegally.
In response to Mr. Milby, Mr. Milby
ten years ago filed a 110-page complaint
alleging illegal activity, sued the City, we
went through the State courts; then he sued us
in the Federal courts, went all through that,
it was all dismissed.
Mr. Woods made an appearance before the
grand jury -- this last grand jury that was
just discharged -- complaining about all
illegal activity here, and the grand jury
dismissed it.
Some people you can't make happy. And they
have the right to do this, and I'm not
complaining about it --
GOVERNOR BUSH: Yeah. But that's not
really relevant --
MR. BRYANT: -- but, you know, we tried to
do the best we could.
And before I leave, I want to say this. I
want to thank the people for coming here. It's
a great educational experience for our
community.
And I'm most appreciative of the
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professionalism exhibited by Eva Armstrong and
her staff. They're -- I can't say they're
totally fair to the City. I know one thing,
they're very firm --
GOVERNOR BUSH: Good.
MR. BRYANT: -- and they're very polite
about what they have to say to us.
And I'll be glad to answer any questions
that you want me to.
GOVERNOR BUSH: Any questions?
Thank you.
Kirby.
MR. GREEN: Governor, the -- the matter
of -- of the marina being open to the public,
the marina -- both the marinas are -- are held
under separate leases to the State. Right now
the conditions in the -- in the leases require
that they be open on a first come, first serve
basis to the public.
We don't see any -- any change in -- in
that recommendation from us. So as far as the
marina proper, those marinas would -- would
stay open to the -- to the general public.
Any change in that would have to come back
before the Board for their approval.
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We -- we've handled this reverter issue
in -- in a number of different ways over the
year -- over the years. We've had similar
properties that were filled around about the
1960 era when we started to put regulation
on -- on dredge and fill in the state.
And -- and lands were filled that had valid
Corps permits, but didn't have permits from the
State. And -- and we've conveyed title to
municipal governments for those lands with a
public interest clause.
The way we've handled it in other places,
down in -- in Punta Gorda, we sold them the
land and removed the reverter clause.
Over in Jacksonville, they wanted to put
a -- a Mark Adam (sic) hotel on -- on those
submerged lands as part of the redevelopment
area. We -- we declared in that instance,
that -- that the redevelopment was consistent
with the public purpose, and left the public
purpose clause on the deed, and -- and allowed
them to do the construction.
We've done similar things in -- in the City
of Miami, and -- in the Bayfront area, where
we've declared that marina type retail sales is
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consistent with -- with the public purpose, and
included those.
So we have a history of -- of this type of
action in the state. Some of them we've done
this way, and released the reverter; and some
of them, we've -- we've handled by declaring
that the -- that the activity was consistent
with the public purpose.
In this case, the City wanted to have a --
a release of the public purpose clause. We
negotiated that on a -- on a 20-year basis so
that we could come back in and look at it for
some portion of the -- the gross retail sales
that would be carried on at the site.
So we get to review it on a periodic basis.
If -- and see if they're carrying out the
public purpose as it's anticipated.
GOVERNOR BUSH: Any questions?
ATTORNEY GENERAL BUTTERWORTH: I have a
question.
So, Kirby, we -- we are not releasing the
public interest reverter?
MR. GREEN: We are releasing it for a
20-year period, with a 20-year renewal. At the
end of the 20-year period, we can renegotiate
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the -- the value of the -- the future releases,
and -- and a determination of whether it's in
the public purpose.
ATTORNEY GENERAL BUTTERWORTH: And how --
how does this defer from the -- the
Adams's Mark in -- in downtown Jacksonville?
MR. GREEN: In that case, we just declared
that the Adam's Mark was -- was -- was in the
public purpose, and -- and didn't remove the
reverter at all.
We just -- we -- we told the local
government, because of their concern, that the
lands would revert, that it was consistent, and
they moved forward in that -- in that way.
ATTORNEY GENERAL BUTTERWORTH: So we
cannot -- and the Adam's Mark took off that
whole piece of property.
MR. GREEN: That's correct.
ATTORNEY GENERAL BUTTERWORTH: We cannot do
anything for a 20-year period, even if that --
if something happens here, we have to wait
20 years before we can -- we can actually
review this?
If -- if something is not in the public
purpose -- obviously not in a public interest?
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MR. GREEN: The way the deal is structured
right now, yes, sir, that's correct.
COMMISSIONER GALLAGHER: Well --
MR. GREEN: Except -- except for the
marina --
ATTORNEY GENERAL BUTTERWORTH: The
marina --
MR. GREEN: -- the slip portion.
ATTORNEY GENERAL BUTTERWORTH: -- we have
the marina. Okay.
COMMISSIONER GALLAGHER: Well, why wouldn't
we just have the City ask us when they wanted
to do certain leases or anything for public
purpose, and we do the same thing we did in
Jacksonville, give them permission when,
in fact, it does meet public purposes.
MR. GREEN: There was some concern among
the attorneys that if -- if we made this
declaration for the commercial entities here,
that we would -- we would be setting a
precedent for other commercial activities here.
In the Jacksonville case, and in other
cases, there was a -- a definite downtown
redevelopment plan that they presented to the
Department, and we could see what -- what the
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future was for those areas. And -- and that's
the way we approached it.
In this case, we didn't have a detailed
plan, even though they've told us that they
want to maintain it for public purposes. We
haven't seen any -- any documentation or a
long-term plan that got us there.
GOVERNOR BUSH: Would we see it, or --
under --
COMMISSIONER GALLAGHER: Yeah.
MR. GREEN: I'm --
GOVERNOR BUSH: -- approval -- if there's
any improvement at all, then --
COMMISSIONER GALLAGHER: Well, we're out of
the deal --
MR. GREEN: Under the --
COMMISSIONER GALLAGHER: -- for 20 years.
MR. GREEN: -- under the deal as currently
structured, no, sir, we would not.
COMMISSIONER GALLAGHER: Well, why -- why
wouldn't we -- I mean, everybody agrees,
including the City, that it's for a public
purpose.
So why wouldn't we just -- when they do
whatever they're going to do for public
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purpose, bring it back to the Department, and
have them say, yes, it's for public purpose or
not?
MR. GREEN: You could.
There are a couple of things we could do.
We could -- we could just release the -- the
public purpose on the current commercial
activities, which would be less than 2 acres of
the 22-acre site.
We could -- we could declare that those
public purp-- that those current activities are
consistent with the public purpose, and -- and
leave the public purpose reverter on the deed
and -- and ask --
COMMISSIONER GALLAGHER: Well, is that
their concern, that the two existing leases
that are there? Or is their concern future,
doing whatever they want to it?
COMPTROLLER MILLIGAN: Governor, didn't --
didn't I hear someone say that the
Supreme Court had ruled that the remaining
current commercial enterprises have been
declared by the courts consistent?
To the public --
MR. BRYANT: All of the commercial uses
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that were a part of the marina structure, the
restaurants and everything else, all these
shops, were declared to be incidental to the
public purpose and, therefore, did
not defeat --
GOVERNOR BUSH: Right.
MR. BRYANT: The problem is --
GOVERNOR BUSH: But the question is what
about the future? This is a beautiful piece of
property --
MR. BRYANT: Right.
GOVERNOR BUSH: -- it's underdeveloped. I
assume that there's enterprising City officials
that might want to redevelop the property --
MR. BRYANT: Well --
GOVERNOR BUSH: -- in which case, you'd
change the dynamics of that question.
MR. BRYANT: This is part of the Downtown
Improvement Board. We -- we have a CRA this is
a part of. We've been trying to get private
industry down here for over 20 years. We've
had some. We've had publications, we've
done -- okay.
And it just hasn't happened to us. And we
need help of the private industry. But,
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you know, if you think about it, for
10 years -- for 20 years, that's not a long
time to do anything that's major that would
involve a great deal of capital expenditure.
You have to go through a great deal of process
to come back to the Cabinet to do that.
The problem I had with that, last week when
we talked about this, if I have a person that
wants to come down and sell hot dogs, a
vendor --
GOVERNOR BUSH: There's some right --
MR. BRYANT: -- he has to, first of all --
GOVERNOR BUSH: -- there's some right
outside. Unfortunately --
MR. BRYANT: -- he has to --
GOVERNOR BUSH: -- we're not going to be
able to see them.
MR. BRYANT: -- first part, and,
you know -- and that's a commercial use. And
what the -- what we're trying to get away from
is the commercial use restriction.
And I think the City will always serve a
public purpose. We just want to make it more
what -- responsive to the public itself day in
and day out, which it's not.
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ATTORNEY GENERAL BUTTERWORTH: If I might
ask a question --
GOVERNOR BUSH: Yes.
ATTORNEY GENERAL BUTTERWORTH: -- Governor.
This'll go to Kirby.
Kirby, is one of your lawyers here today
who -- who drafted some of the language? I --
I believe -- it's been a long time.
But wasn't there some language that allowed
us that if we thought they did something that
was not in the public interest, we -- we could
come back in and -- and raise the issue. But a
court -- but in that particular position,
we'd -- we'd have to go to court to a have a
Court tell us that -- who wins.
Is that still there, or is that out now?
MR. GREEN: John.
John Costigan, Department attorney.
MR. COSTIGAN: General, right now, that
language -- there's nothing in this release of
this reverter, public purpose clause in the
deed. There's nothing in there that affords
the Board that opportunity.
If, let's say -- you'd be in a position
right now, you have a deed where you conveyed
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the property to Panama City, you retained the
public purpose clause in there, you could
conceivably be in litigation with Panama City
over whether a particular use of this property
was or was not in the public purpose.
But that's the current situation. The
proposed staff recommendation has a release of
the reverter, which the only restrictions on it
are that it be used for commercial and retail
use. And it can't be contrary to law, and it
can't be a nuisance.
Other than that, when you release the
reverter, that's it.
And it's either up to the -- the public
officials of Panama City to continue then to
use the property for the public -- public use
in whatever fashion they deem appropriate, or
not.
ATTORNEY GENERAL BUTTERWORTH: A -- then a
follow-up question, whoever has the history on
this.
But with Bayside, when we gave it up there,
do -- didn't we -- didn't they already have a
master plan, and we knew that, and so with
that, we went ahead and -- and did it.
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MR. COSTIGAN: I think that was -- that was
in June. That was part of an entire renovation
project in that part of Miami. And central to
it, amongst a mall and -- and shops and
everything else, restoration, I believe of an
old airline hangar, was also a marina.
GOVERNOR BUSH: Are you talking about
Bayside down in --
ATTORNEY GENERAL BUTTERWORTH: I think that
generally -- I think we knew what Miami was
going to do after they --
GOVERNOR BUSH: Oh, the -- oh, the row.
ATTORNEY GENERAL BUTTERWORTH: Right.
MR. COSTIGAN: They had an entire plan.
And central to it was the marina, which had
some submerged land out there --
ATTORNEY GENERAL BUTTERWORTH: Right.
MR. COSTIGAN: -- that still had the
restriction on it, and it had the -- to make
the larger renovation work, the -- the release
of the reverter was necessary, and the Board
found that that was in the public interest,
because it was in an aquatic preserve.
And the Board also found that there was --
I believe extreme hardship if you didn't, which
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was also a requirement of the Biscayne Bay
Aquatic Preserve rules.
GOVERNOR BUSH: General Milligan.
MR. COSTIGAN: But you did have a specific
design.
COMPTROLLER MILLIGAN: And that was the
similar case I think in Jacksonville, and --
and Punta Gorda, too, that we knew what their
plan was.
MR. COSTIGAN: I believe that's correct.
COMMISSIONER GALLAGHER: Why don't we do --
why don't we just approve this, subject to a
master plan approval, like everyone else has
done.
And I know that the City's got to be
working on a master plan, and we want to help
encourage them to have one.
MR. BRYANT: Well --
GOVERNOR BUSH: Counselor, what do you
think?
MR. BRYANT: -- I think it's too
restrictive. You know, you need to look around
you to see what we've done. We've been most
respective of the fiduciary capacity the City
serves the public in, the public purpose
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itself. It's not that big a place.
GOVERNOR BUSH: Oh, but I mean, the point
is if you do nothing, you -- you --
MR. BRYANT: We've been trying to do
something --
GOVERNOR BUSH: -- but if you -- you --
MR. BRYANT: -- particularly --
GOVERNOR BUSH: -- you make a major change,
then --
MR. BRYANT: We --
GOVERNOR BUSH: -- as has been the
precedent set in other parts of the state, we
simply would like to know what it is.
And --
MR. BRYANT: Well, I wish we did know.
We've had the Downtown Improvement Board
working on it for 20 years, we do have
master plans, we can't get anybody to buy into
it.
The City does not --
GOVERNOR BUSH: Well then, there won't be a
problem.
MR. BRYANT: -- want to get into the -- the
restaurant business. We hope that someone
would come down here and do something like
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that. Maybe do -- we've got a public speaking
platform down here.
It's just a public facility.
I mean, I -- and -- but we need some retail
shops or --
(Treasurer Nelson exited the room.)
MR. BRYANT: -- get some --
COMMISSIONER GALLAGHER: Well, we won't
have a problem with that, because if you look
at Bayside, that's probably 50 retail shops
sitting there. And we're not against that,
because it's a public purpose.
But I think we -- we just believe that --
that maybe you should present what that --
what -- what the plan is, and move on with the
plan, as opposed to just carte blanche do
whatever.
MR. BRYANT: Well, you know, it's -- okay.
I just -- planning takes money, and the
Downtown Improvement Board has been in charge
of this. They've done a great deal.
McKenzie Park is one of the things they've
done for downtown. And --
ATTORNEY GENERAL BUTTERWORTH: Sir, let me
ask how many -- let me ask you --
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MR. BRYANT: Yes, sir.
ATTORNEY GENERAL BUTTERWORTH: -- one
question here.
Is it your interpretation, the same as
Kirby's, that no matter what you do with this
piece of property -- no matter what the City
does with this piece of property, we cannot
revisit it for 20 years.
Is that what you're saying? You agree with
Kirby.
MR. BRYANT: I do agree with that, yes.
ATTORNEY GENERAL BUTTERWORTH: Okay.
MR. BRYANT: That's the way it's written.
ATTORNEY GENERAL BUTTERWORTH: Okay. Now,
it takes five votes --
I believe it takes -- it's -- it's a four
or five vote case, Kirby?
MR. GREEN: It's a five.
ATTORNEY GENERAL BUTTERWORTH: It's a
five vote case.
I -- I agree with Commissioner Gallagher,
count your votes.
MR. BRYANT: Okay. Well, you know, you
people are in charge. Obviously I'm not. I'm
here to support the City, and the City has been
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a most responsive governmental body to the
population here.
And we negotiated this thing. We've been
negotiating since 1998. And it's taken a long,
hard fight. And we have not agreed necessarily
with what DEP wants. And --
GOVERNOR BUSH: With all due respect
though, what are we doing -- what would we do
by accepting Commissioner Gallagher's idea to
have a prior approval of a -- of a site plan or
a plan that -- that you have submitted.
What -- what are we doing to slow down any
development --
MR. BRYANT: I have no --
GOVERNOR BUSH: And --
MR. BRYANT: -- I can't answer it. I don't
really know --
GOVERNOR BUSH: And what -- and based on
the tradition that you've just heard of things
that are -- if -- if -- if a major convention
hotels consider -- I don't even know if it's a
convention hotel -- but if a hotel's considered
a public use, and if a Bayside marina, which is
a, you know, 300,000 foot shopping center is
considered a public use, anything that you
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could come up with, out of fairness -- I mean,
we could -- we couldn't -- it wouldn't stand a
court challenge if that is the precedent --
MR. BRYANT: Well --
GOVERNOR BUSH: -- that's been set in
other --
COMMISSIONER GALLAGHER: And the City
wants --
GOVERNOR BUSH: -- parts of --
COMMISSIONER GALLAGHER: -- to do it.
GOVERNOR BUSH: -- the state.
COMMISSIONER GALLAGHER: And the City wants
to do it.
GOVERNOR BUSH: So what -- I don't think
we're -- the last thing I want to do, because
you guys have been great hosts to us, is to --
MR. BRYANT: Well, no. But --
GOVERNOR BUSH: -- disrespect that.
But I mean, if you could give me one
thing -- give me one -- give me -- give us some
sense of what we're -- what we would do to --
to slow down the well-intended efforts to
develop this property. Or redevelop it.
COMMISSIONER CRAWFORD: Let -- Governor,
let me --
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MR. BRYANT: I don't mind that. I mean, if
that's what you want, micromanage, you can. I
was hopeful --
GOVERNOR BUSH: No, no, no, no. See --
MR. BRYANT: -- the City --
GOVERNOR BUSH: You didn't answer the
question.
ATTORNEY GENERAL BUTTERWORTH: We're trying
to help you is what --
MR. BRYANT: Okay. That's the --
all right. I just --
COMMISSIONER CRAWFORD: I don't think
they're helping you, but -- let -- counselor,
let me just jump in here a second.
Governor, I would -- I would kind of take
the re-- take the other side of that -- of --
the logic, which is very logical, and -- and
the extension of that I guess would be --
(Treasurer Nelson entered the room.)
COMMISSIONER CRAWFORD: -- what is it we're
afraid of. You know, it's -- I think --
I think that the --
GOVERNOR BUSH: Only afraid of -- we've
only got four votes at the box.
COMMISSIONER CRAWFORD: Well, yeah. I
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know. I know. He doesn't -- he can't --
you know, he might have my vote, but that's --
one vote won't do it.
But I just -- on -- on his side, I would
just say that --
MR. BRYANT: We're not afraid of this.
COMMISSIONER CRAWFORD: Yeah.
MR. BRYANT: We're not.
COMMISSIONER CRAWFORD: But the other --
MR. BRYANT: That's true.
COMMISSIONER CRAWFORD: -- the other
communities that we referred to down in Miami
had a very sophisticated plan, a lot of money
behind it. And they built intensive commercial
operations.
And so, you know, they did that, and it was
fine. But what I hear this City saying, they
don't have the resources, but they're trying to
do a few little things. I'm not quite sure
what it is --
MR. BRYANT: Well, we're trying to get a
hotel. We've written to every hotel in the
country to come down and do something, and it
never has it work.
COMMISSIONER CRAWFORD: So if we -- if we
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give them this -- the -- my que was that --
that one of the speakers that had a concern
about the marina was that -- as -- as Kirby
confirmed, is that they can't deny access to
the marinas. And to me, that -- that's very
important.
And then if -- if that was denied, then we
could come back and revisit it. So it's not
carte blanche that we can't come back in
20 years. If they do something like that, we
could.
I -- and I think that -- that gives a lot
of weight to the merits of this issue that,
you know, they probably will have access to the
marina.
And, if, in fact, we --
GOVERNOR BUSH: Why don't we do this then:
Why don't we do something where there's a
threshold for development so that there's
enough flexibility for a small reuse that --
where we're not micromanaging --
MR. BRYANT: Okay. All right.
GOVERNOR BUSH: -- that hits me right in
the heart --
MR. BRYANT: I didn't mean to, you know,
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categorically --
GOVERNOR BUSH: -- and we --
No. It was effective. It worked.
At least for me. I don't like it. That's
kind of a word I try to avoid being accused of.
But if there's some threshold over which
that you would -- where -- where the public use
then -- then comes into question, depending on
what that use is, would that be acceptable?
ATTORNEY GENERAL BUTTERWORTH: You know, if
you're leaving -- if you're leaving a threshold
though. There's an awful lot of property out
there on 22 acres. They could do 30,000 --
3,000 square feet here, and 30,000 here, and
keep adding on and adding on.
If we had something in here which would
allow us to come back in -- if -- if they go
ahead and do something and something we don't
think is right, we should have the opportunity
to at least come back in.
And that's all that's --
MR. BRYANT: We --
ATTORNEY GENERAL BUTTERWORTH: -- a
compromise is --
MR. BRYANT: -- cannot agree with --
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COMMISSIONER CRAWFORD: But you're not --
you're --
MR. BRYANT: -- with --
COMMISSIONER CRAWFORD: -- but you're not
giving them what they're -- I mean, you're
telling them, you're not giving them what
they're ask-- they're asking for us to remove
that restriction.
ATTORNEY GENERAL BUTTERWORTH: But --
COMMISSIONER CRAWFORD: We're keeping the
restriction.
ATTORNEY GENERAL BUTTERWORTH: Right.
We're not keeping the restriction. We're --
we're saying that we will have the opportunity
to come in, but not to enter through the courts
if we don't believe.
But we have -- but we have citizens here
concerned. And -- and I think a lot of us
are -- I understand what happened here in the
past.
And --
MR. BRYANT: I -- you know, I'd much rather
you take the authority to say yes or no, not go
through the court system, because that takes --
ATTORNEY GENERAL BUTTERWORTH: I agree with
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that, too.
MR. BRYANT: -- 18 months, 2,000 --
COMMISSIONER GALLAGHER: Amen.
MR. BRYANT: -- you know --
GOVERNOR BUSH: I totally agree with you.
MR. BRYANT: Just go ahead and --
ATTORNEY GENERAL BUTTERWORTH: Well, we
have two new law schools, so we're going to
need a lot -- lot more --
MR. BRYANT: Yeah.
That's just -- that's just -- you know, I
don't mind bringing the plan -- I don't have
anything to hide.
I just want a lot of credit for the City
for doing a good job, and I didn't get it, and
it's okay.
And -- but, you know, we've done -- we've
served the public, and we continue to want to.
And we don't mind -- we'll give you the plan.
I agree, we have nothing to fear.
COMMISSIONER GALLAGHER: Here's why I'm
coming -- where I -- we've basically set a
precedent already that -- that municipalities
and local governments that have land that --
that we have responsibility for, give us a
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plan, we approve it.
And I'm concerned about changing that
precedent to this precedent, which is we just
say, go ahead and do whatever you want, and
we'll look at it 20 years from now.
And that -- that's really where I'm coming
from. It's not because of Panama City, it's
because of --
MR. BRYANT: I understand.
COMMISSIONER GALLAGHER: -- a precedent
that we -- we knew and established.
And everybody that has, you know, similar
property like this that they have reconstituted
or exists, or that we really have
responsibility over, would come and say, okay,
give us unrestricted for 20 years, and we'll do
whatever we want.
And I just think that's a bad precedent,
and a bad road --
MR. BRYANT: Well --
COMMISSIONER GALLAGHER: -- to go down.
MR. BRYANT: -- I don't -- I can't say I
disagree with that.
But, you know, the origin of how we got to
where we are today, and the values we've
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created, were created legally, not illegally.
COMMISSIONER GALLAGHER: Well, that's
not -- that's --
MR. BRYANT: And --
COMMISSIONER GALLAGHER: -- that's not in
question.
MR. BRYANT: -- we're not making money off
of State land with all our public buildings
that we've spent this money on.
GOVERNOR BUSH: Right.
MR. BRYANT: And -- but obviously we need
something down here to -- to serve the public.
And that's --
COMMISSIONER GALLAGHER: And we want to
help you get it.
ATTORNEY GENERAL BUTTERWORTH: Everybody
agrees with that.
GOVERNOR BUSH: We're agreeing with you.
COMMISSIONER GALLAGHER: We want to help
you get it.
ATTORNEY GENERAL BUTTERWORTH: We agree.
MR. BRYANT: You might see me 100 times
from now on, okay?
GOVERNOR BUSH: Well --
COMMISSIONER GALLAGHER: That's okay.
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GOVERNOR BUSH: That's the only part I --
you got me on that micromanagement thing. I
hope that --
SECRETARY HARRIS: You've got a good
solution.
GOVERNOR BUSH: -- once you have a site --
either a threshold or a site plan approval
where you don't -- we don't have to -- every --
every use that you come up with, you don't have
to come get approval, because that's not what
the --
ATTORNEY GENERAL BUTTERWORTH: Governor --
GOVERNOR BUSH: -- purpose of this is.
ATTORNEY GENERAL BUTTERWORTH: -- could
they possibly maybe do something with this, and
let them -- to either have language come back
to us, or something, have Kirby and the City
work out some language with -- with our staffs
maybe as to --
MR. BRYANT: I would like that, and then
let them present -- involve the City. And
we'll just go about what --
ATTORNEY GENERAL BUTTERWORTH: That's a
very good lawyer. He knows what's been
proposed today, but -- but tomorrow you might.
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That's --
GOVERNOR BUSH: All right. Is there a
motion to defer, is that what you're saying?
COMMISSIONER GALLAGHER: I would defer
when -- till the Department's ready to bring
back an agreed-upon plan that -- that will help
the City do what they want to do.
GOVERNOR BUSH: We want you to come back to
Tallahassee. We'd love to see you with a
solution over there.
MR. BRYANT: Okay.
GOVERNOR BUSH: Is there a second?
MR. BRYANT: I thought the Department was
pretty tough on us. But I'm learning.
GOVERNOR BUSH: You don't have to start
negotiating now.
ATTORNEY GENERAL BUTTERWORTH: It's all
those the billable hours as we --
GOVERNOR BUSH: Moved and seconded --
motion to defer and second.
Without objection, it's approved.
Thank you.
MR. GREEN: Concludes the agenda.
(The Board of Trustees of the Internal
Improvement Trust Fund Agenda was concluded.)
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* * *
(The Cabinet meeting was concluded at
1:07 p.m. Central Daylight Savings Time.)
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CERTIFICATE OF REPORTER
STATE OF FLORIDA:
COUNTY OF LEON:
I, LAURIE L. GILBERT, do hereby certify that
the foregoing proceedings were taken before me at the
time and place therein designated; that my shorthand
notes were thereafter translated; and the foregoing
pages numbered 96 through 256 are a true and correct
record of the aforesaid proceedings.
I FURTHER CERTIFY that I am not a relative,
employee, attorney or counsel of any of the parties,
nor relative or employee of such attorney or counsel,
or financially interested in the foregoing action.
DATED THIS 9TH day of OCTOBER, 2000.
LAURIE L. GILBERT, RPR, CCR, CRR, RMR
100 Salem Court
Tallahassee, Florida 32301
850/878-2221
ACCURATE STENOTYPE REPORTERS, INC.
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